Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2025-01-04T23:52:22.587Z Has data issue: false hasContentIssue false
  • English
  • Français

Regulatory Quality Under Imperfect Oversight

Published online by Cambridge University Press:  26 July 2007

ETHAN BUENO DE MESQUITA  and
MATTHEW C. STEPHENSON
ETHAN BUENO DE MESQUITA
Affiliation:
Washington University
MATTHEW C. STEPHENSON
Affiliation:
Harvard Law School
Get access Rights & Permissions [Opens in a new window]

Abstract

We analyze the positive and normative implications of regulatory oversight when the policymaking agency can improve the quality of regulation through effort, but only some kinds of effort are observable by the overseer, and the overseer's only power is the ability to veto new regulation. Such oversight can increase the quality of agency regulation, but it also introduces inefficiencies—the agency underinvests in unobservable effort and overinvests in observable effort. Agencies have no incentive to conceal their activities from the overseer; the reforms that are likely to reduce inefficiency are therefore those that improve overseer expertise or lower the costs of agency disclosure, not those that compel disclosure. The normative implications depend on the relative severity of bureaucratic drift and slack problems. When slack is paramount, an overseer that is more anti-regulation than the agency or society improves social welfare, as long as it does not deter the agency from regulating entirely. When drift is paramount, oversight improves social welfare only when it deters regulation. In this case, regulatory oversight is weakly dominated by one of two alternatives: eliminating oversight or banning regulation.

Type
ARTICLES
Information
American Political Science Review , Volume 101 , Issue 3 , August 2007 , pp. 605 - 620
Copyright
© 2007 by the American Political Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ackerman Frank, and Lisa Heinzerling. 2002. “Pricing the Priceless: Cost-Benefit Analysis of Environmental Protection.” University of Pennsylvania Law Review 150 (May): 1553– 84.Google Scholar
Aranson Peter H., Ernest Gellhorn, and Glen O. Robinson. 1983. “A Theory of Legislative Delegation.” Cornell Law Review 68 (November): l– 67.Google Scholar
Banks Jeffrey S., and Barry R. Weingast. 1992. “The Political Control of Bureaucracies Under Asymmetric Information.” American Journal of Political Science 36 (May): 509– 24.Google Scholar
Bawn Kathleen. 1995. “Political Control versus Expertise: Congressional Choices About Administrative Procedures.” American Political Science Review 89 (March): 62– 73. Bendor, Jonathan, and Adam Meirowitz. 2004. “Spatial Models of Delegation.” American Political Science Review 98 (May): 293–310.Google Scholar
Boehmke Fred, Sean Gailmard, and John Patty. 2006. “Whose Ear to Bend? Information Sources and Venue Choice in Policy-Making.” Quarterly Journal of Political Science l (March): 139– 69.Google Scholar
Breyer Stephen. 1986. “Judicial Review of Questions of Law and Policy.” Administrative Law Review 38 (Fall): 363– 98.Google Scholar
Bueno de Mesquita Ethan. 2007. “Politics and the Suboptimal Provision of Counterterror.” International Organization. 61 (Winter): 9– 36.Google Scholar
Cooper Joseph, and Williams F. West. 1988. “Presidential Power and Republican Government: The Theory and Practice of OMB Review of Agency Rules.” Journal of Politics 50 (November): 864– 95.Google Scholar
Cross Frank B. 2000. “Pragmatic Pathologies of Judicial Review of Administrative Rulemaking.” North Carolina Law Review 78 (April): 1013– 69.Google Scholar
de Figueiredo Rui J. P., Pablo T. Spiller, and Santiago Urbiztondo. 1999. “An Informational Perspective on Administrative Procedures.” Journal of Law, Economics, and Organization 15 (April): 283– 305.Google Scholar
DeMuth Christopher C., and Douglas H. Ginsburg. 1986. “White House Review of Agency Rulemaking.” Harvard Law Review 99: 1075– 88.CrossRefGoogle Scholar
Eckert Ross D. 1981. “The Life Cycle of Regulatory Commissioners.” Journal of Law and Economics 24 (April): 113– 20.Google Scholar
Epstein David, and Sharyn O'Halloran. 1999. Delegating Powers: A Transaction Cost Politics Approach to Policy Making Under Separate Powers. Cambridge: Cambridge University Press.
Epstein Richard A. 1995. Simple Rules for a Complex World. Cambridge: Harvard University Press.
Gailmard Sean. 2006. “Discretion Rather that Rules: Choice of Instruments to Constrain Bureaucratic Policy-Making.” Unpublished manuscript, Northwestern University.
Gailmard Sean, and John W. Patty. 2007. “Slackers and Zealots: Civil Service, Policy Discretion, and Bureaucratic Expertise.” American Journal of Political Science 51 (October). Forthcoming.Google Scholar
Gillette Clayton P., and James E. Krier. 1990. “Risk, Courts, and Agencies.” University of Pennsylvania Law Review 138 (April): 1027– 09.Google Scholar
Gordon Sanford C., and Catherine Hafer. 2005. “Flexing Muscle: Corporate Political Expenditures as Signals to the Bureaucracy.” American Political Science Review 99 (May): 245– 61.Google Scholar
Hayek Friedrich A. 1944. The Road to Serfdom. Chicago: University of Chicago Press.
Heclo Hugh. 1988. “The In-and-Outer System: A Critical Assessment.” Political Science Quarterly 103 (Spring): 37– 56.Google Scholar
Holmström Bengt, and Paul Milgrom. 1991. “Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design.” Journal of Law, Economics and Organization 7 (SI): 24– 52.Google Scholar
Hopenhayn Hugo, and Susanne Lohmann. 1996. “Fire Alarm Signals and the Political Oversight of Regulatory Agencies.” Journal of Law, Economics, and Organization 12 (April): 196– 213.Google Scholar
Horn Murray J., and Kenneth A. Shepsle. 1989. “Administrative Process and Organizational Form as Legislative Responses to Agency Costs.” Virginia Law Review 75 (March): 499– 508.Google Scholar
Lawson Gary. 1994. “The Rise and Rise of the Administrative State.” Harvard Law Review 107 (April): 1231– 54.Google Scholar
Lowi Theodore J. 1979. The End of Liberalism: The Second Republic of the United States. New York: Norton.
McCubbins Mathew D., Roger G. Noll, and Barry R. Weingast. 1987. “Administrative Procedures as Instruments of Political Control.” Journal of Law, Economics, and Organization 3 (Autumn): 243– 77.Google Scholar
McCubbins Mathew D., Roger G. Noll, and Barry R. Weingast. 1989. “Structure and Process, Politics and Policy: Administrative Arrangements and the Political Control of Agencies.” Virginia Law Review 75 (March): 431– 82.Google Scholar
McGarity Thomas O. 1992. “Some Thoughts on ‘Deossifying’ the Rulemaking Process.” Duke Law Journal 41 (June): 1385– 1462.Google Scholar
Moe Terry M. 1990. “Political Institutions: The Neglected Side of the Story.” Journal of Law, Economics, and Organization 6 (SI): 213– 54.Google Scholar
Morrison Alan B. 1986. “OMB Interference with Agency Rulemaking: The Wrong Way to Write a Regulation.” Harvard Law Review 99 (March): 1059– 74.Google Scholar
Niskansen William A. 1971. Bureaucracy and Representative Government. Chicago: Aldine, Atherton.
Pierce Richard J. Jr., 1995. “Seven Ways to Deossify Agency Rulemaking.” Administrative Law Review 47 (Winter): 59– 95.Google Scholar
Rachlinski Jeffrey J., and Cynthia R. Farina. 2002. “Cognitive Psychology and Optimal Government Design.” Cornell Law Review 87 (January): 549– 615.Google Scholar
Seidenfeld Mark. 1997. “Demystifying Deossification: Rethinking Recent Proposals to Modify Judicial Review of Notice and Comment Rulemaking.” Texas Law Review 75 (February): 483– 524.Google Scholar
Seidenfeld Mark. 2002. “The Psychology of Accountability and Political Review of Agency Rules.” Duke Law Journal 18 (December): 1051– 95.Google Scholar
Shapiro Martin. 1988. Who Guards the Guardians?: Judicial Control of Administration. Athens: University of Georgia Press.
Shepsle Kenneth A. 1992. “Bureaucratic Drift, Coalitional Drift, and Time Consistency.” Journal of Law, Economics, and Organization 8 (March): 111– 18.Google Scholar
Spence David B., and Frank Cross. 2000. “A Public Choice Case for the Administrative State.” Georgetown Law Journal 89 (November): 97– 142.Google Scholar
Stephenson Matthew C. 2006a. “A Costly Signaling Theory of ‘Hard Look’ Judicial Review.” Administrative Law Review 58 (Fall): 753– 813.Google Scholar
Stephenson Matthew C. 2006b. “Legislative Allocation of Delegated Power: Uncertainty, Risk, and the Choice Between Agencies and Courts.” Harvard Law Review 119 (February): 1035– 70.Google Scholar
Stephenson Matthew C. 2007. “Bureaucratic Decision Costs and Endogenous Agency Expertise.” Journal of Law, Economics, and Organization. Forthcoming.Google Scholar
Stigler George J. 1971. “The Theory of Economic Regulation.” Bell Journal of Economics and Management Science 2 (Spring): 3– 21.Google Scholar
Sunstein Cass. 1984. “In Defense of the Hard Look: Judicial Activism and Administrative Law.” Harvard Journal of Law and Public Policy 7 (Winter): 51– 9.Google Scholar
Ting Michael M. 2001. “The ‘Power of the Purse’ and its Implications for Bureaucratic Policy-Making.” Public Choice 106 (March): 243– 74.Google Scholar
Wagner Wendy E. 2003. “The ‘Bad Science’ Fiction: Reclaiming the Debate Over the Role of Science in Public Health and Environmental Regulation.” Law and Contemporary Problems 66 (Autumn): 63– 133.Google Scholar
Weingast Barry R., and Mark J. Moran. 1983. “Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission.” Journal of Political Economy 91 (October): 765– 800.Google Scholar
Wiseman Alan. 2007. “Delegation and Bureaucratic Policymaking with Competing Oversight.” Unpublished Manuscript.Google Scholar
Submit a response

Comments

No Comments have been published for this article.