Working paper 00/018 - Abstract

Elected versus Appointed Regulators

Timothy Besley* and Stephen Coate**

*Department of Economics, London School of Economics
**Department of Economics, Cornell University

This paper contrasts direct election with political appointment of regulators. When regulators are appointed, regulatory policy becomes bundled with other policy issues the appointing politicians are responsible for. Since regulatory issues are not salient for most voters, regulatory policy outcomes reflect the preferences of party elites and special interests. Direct election of regulators strengthens the power of voters by ensuring the salience of regulatory issues. Using panel data on regulatory outcomes from US states, we find evidence in favour of the idea that elected states are more pro-consumer in their regulatory policies.

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