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| Author(s): | Herk, Leonard F. |
| Title: | Optimal Regulator Transparency |
| Issue Date: | 1997-Sep |
| Keywords: | JEL Code: D73 JEL Code: K40 JEL Code: K42 Regulatory Transparency Regulatory Efficiency Corruption |
| Series no.: | Discussion Paper 9798-01 |
| Bookmark as: | http://hdl.handle.net/10022/AC:P:15717 |
| Abstract: | Private investment activity is regulated by two semi-independent agencies: an enforcement authority and an appeals authority. Once undertaken, an investment project may be interdicted by the enforcement authority before its final payoff is realized. The investor may refer an interdiction to the appeals authority, who upholds or voids the interdiction according to a privately known rule of law. The appeals authority determines the degree of regulatory transparency by issuing more or less revealing guidelines describing the operation of the rule of law in various circumstances. In this setting, the appeals authority maximizes its ability to extract rents from investors by issuing weakly differentiated guidelines which yield the highest possible rate of interdiction by the enforcement authority, together with the highest possible likelihood that interdiction will be overturned on appeal. |
| Collection(s): | Economics Discussion Papers |
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