Transversal Agency and Crowding Out
Pedro Barros, Steffen Hoernig, and Tore Nilssen
Journal of Institutional and Theoretical Economics 2015 171 pp. 589-608.
A country's competition agency is transversal in the sense of being active in the whole economy. We study the interaction between the competition agency and sectoral regulators and establish a scope for sectoral regulators to crowd out each other's efforts: More effort on monitoring anticompetitive behavior by one sectoral regulator causes others to do less. We also find that when government agencies interact under consensus the competition agency spends more effort on the industry with the more consumer-biased sectoral regulator, while the opposite is true under independent decisions.