Working papers:

Optimal Regulator Transparency

Title:: Optimal Regulator Transparency
Author(s):: Herk, Leonard F.
Date:: 1997
Type:: Working papers
Handle:: http://hdl.handle.net/10022/AC:P:15717
Series:: Department of Economics Discussion Papers
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.
Subject(s):: Economics