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Title: A dynamic theory of regulatory capture
Author: De Chiara, Alessandro
Schwarz, Marco A.
Keywords: Corrupció
Teoria de jocs
Seguretat jurídica
Game theory
Legal certainty
Issue Date: 2021
Publisher: Universitat de Barcelona. Facultat d'Economia i Empresa
Series/Report no: [WP E-Eco21/410]
Abstract: Firms often try to influence individuals that, like regulators, are tasked with advising or deciding on behalf of a third party. In a dynamic regulatory setting, we show that a firm may prefer to capture regulators through the promise of a lucrative future job opportunity (i.e., the revolving-door channel) than through a hidden payment (i.e., a bribe). This is because the revolving door publicly signals the firm's eagerness and commitment to rewarding lenient regulators, which facilitates collusive equilibria. We find that opening the revolving door conditional on the regulator's report is usually more efficient than a blanket ban on post-agency employment and may increase social welfare. This insight extends to a variety of applications and can also be used to determine the optimal length of cooling-off periods.
It is part of: UB Economics – Working Papers, 2021, E21/410
Appears in Collections:UB Economics – Working Papers [ERE]

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