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Regulatory burden and business dynamics: a preliminary analysis

Regulatory burden and business dynamics: a preliminary analysis Stigler (1971) first presented a theory of regulation in which the regulator eventually serves the interests of the regulated rather than in the interest of the public good. In such an institutional environment, one should expect to observe outcomes associated with reduced competitive pressures on existing firms. The paper aims to discuss this issue.Design/methodology/approachIn this paper, the authors use RegData, which quantifies regulatory restrictions by industry, to determine whether and to what degree regulation reduces establishment entry and the associated job creation and how regulation impacts existing establishment exit and job creation and destruction.FindingsThe results, while not definitive, are supportive of Stigler’s theory of regulatory capture.Originality/valueThis paper adds to the small but growing empirical literature examining the effects of cronyism more broadly. Prior studies of regulation have generally been either narrowly focused on a specific regulation or employ less precise measures of the extent of regulation. By employing RegData as a measure of regulatory restrictions by industry, this paper offers new insights on the impact of regulation on business dynamics. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Enterpreneurship and Public Policy Emerald Publishing

Regulatory burden and business dynamics: a preliminary analysis

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References (11)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2045-2101
DOI
10.1108/jepp-d-18-00027
Publisher site
See Article on Publisher Site

Abstract

Stigler (1971) first presented a theory of regulation in which the regulator eventually serves the interests of the regulated rather than in the interest of the public good. In such an institutional environment, one should expect to observe outcomes associated with reduced competitive pressures on existing firms. The paper aims to discuss this issue.Design/methodology/approachIn this paper, the authors use RegData, which quantifies regulatory restrictions by industry, to determine whether and to what degree regulation reduces establishment entry and the associated job creation and how regulation impacts existing establishment exit and job creation and destruction.FindingsThe results, while not definitive, are supportive of Stigler’s theory of regulatory capture.Originality/valueThis paper adds to the small but growing empirical literature examining the effects of cronyism more broadly. Prior studies of regulation have generally been either narrowly focused on a specific regulation or employ less precise measures of the extent of regulation. By employing RegData as a measure of regulatory restrictions by industry, this paper offers new insights on the impact of regulation on business dynamics.

Journal

Journal of Enterpreneurship and Public PolicyEmerald Publishing

Published: Aug 14, 2018

Keywords: Regulation; Regulatory capture; Job creation; Job destruction

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