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Delegation, capture and endogenous information structures

Author

Listed:
  • Perrin Lefebvre

    (DEFIPP, 54501University of Namur)

  • David Martimort

    (444510Paris School of Economics)

Abstract
A substantial literature has been devoted to analyzing how legislators delegate regulatory power to a more knowledgeable agency. Yet, much less attention has been paid to understand how this delegation process is shaped by the environment in which this agency operates, and more specifically by the actions of interest groups. We propose a model of regulatory capture to assess how the distribution of information across interest groups and agencies impacts optimal delegation. Whether an interest group and his agency share information or not determines the scope for capture and how much discretion should be left to this agency in response. Whether asymmetric information reduces or increases discretion depends on the biases of the group and the agency vis-Ã -vis Congress. Groups that are more aligned with Congress collect politically relevant information, while more extreme groups remain poorly informed. The information structure that endogenously emerges increases discretion under broad circumstances.

Suggested Citation

  • Perrin Lefebvre & David Martimort, 2022. "Delegation, capture and endogenous information structures," Journal of Theoretical Politics, , vol. 34(3), pages 357-414, July.
    • Handle: RePEc:sae:jothpo:v:34:y:2022:i:3:p:357-414
    DOI: 10.1177/09516298221107552
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    References listed on IDEAS

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    More about this item

    Keywords

    Delegation; bureaucracy; capture; asymmetric Information; endogenous Information Structures; JEL codes:; D82; D86; H10;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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