Presenting “A Dynamic Theory of Regulatory Capture” at 12:15-13:30 in QA405.
PLEASE MIND THE NEW VENUE!
On 25th September 2019 we have Alessandro de Chiara of CEU visiting us. He is going to give a seminar titled “A Dynamic Theory of Regulatory Capture“ at 12:15-13:30 in room A405 in Building Q, Budapest University of Technology and Economics, Faculty of Economic and Social Sciences, Magyar tudósok körútja 2, 1117 Budapest. Sandwiches will be provided. Please register. Also see our Facebook event.
Abstract: A firm can try to influence the behavior of its regulators. In a dynamic setting, we show that the firm may prefer to capture a regulatory official through the promise of a lucrative future job opportunity rather than through a covert payment. This is because the revolving door publicly signals the firm’s eagerness and commitment to reward friendly officials, which facilitates collusive equilibria. We highlight that closing the revolving door may give rise to other inefficiencies and we provide alternative policy prescriptions. Finally, we discuss how our model can account for the existing empirical evidence on the effects of the revolving-door practices in different industries.