Protection without Capture: Product Approval by a Politically Responsive, Learning Regulator

When policy arrangements appear to favor well-organized and wealthy interests, should we infer “capture” of the political process? In particular, might larger firms receive regulatory “protection” even when the regulatory agency is not captured by producers? I model regulatory approval—product appro...

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Veröffentlicht in:The American political science review 2004-11, Vol.98 (4), p.613-631
1. Verfasser: CARPENTER, DANIEL P.
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description When policy arrangements appear to favor well-organized and wealthy interests, should we infer “capture” of the political process? In particular, might larger firms receive regulatory “protection” even when the regulatory agency is not captured by producers? I model regulatory approval—product approval, licensing, permitting and grant making—as a repeated optimal stopping problem faced by a learning regulator subject to variable political pressure. The model is general but stylistically applied to pharmaceutical regulation. Under the assumption that consumers are differentially organized, but producers are not, there nonetheless exist two forms of “protection” for larger, older producers. First, firms submitting more applications may expect quicker and more likely approvals, even in cases where their reputations for safety are below industry average. Second, “early entrants” to an exclusive market niche (disease) receive shorter expected approval times than later entrants, even when later entrants offer known quality improvements. The findings extend to cases of bounded rationality and a reduced form of endogenous firm submissions. The model shows that even interest-neutral “consumer” regulation can generate protectionist outcomes, and that commonly adduced evidence for capture is often observationally equivalent to evidence for other models of regulation.
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source Worldwide Political Science Abstracts; JSTOR Archive Collection A-Z Listing; Cambridge University Press Journals Complete
subjects Administrative agencies
Approval
Capital costs
Commercial regulation
Competition
Consumers
Drug design
Drug regulation
Economic regulation
Enterprises
Evidence
Familiarity
FDA approval
Financial regulation
Government (Administrative Body)
Government Policy
Government Regulation
Industrial regulation
Inferences
Litigation
Medicine
Pharmaceutical industry
Pharmaceutical preparations
Political economy
Political Influences
Political science
Politics
Prescription drugs
Product lines
Product quality
Product safety
Products
Protectionism
Regulated industries
Regulation
Regulatory approval
Regulatory theory
Studies
title Protection without Capture: Product Approval by a Politically Responsive, Learning Regulator
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