Tentative thoughts on an extension of the Peltzman model

Based on the insights provided by the Peltzman model, consider the scenario where a policy maker is considering the provision of a subsidy to a special interest group. Clearly M(.) still describes the isovote curve. However, order to consider this application of the model, it is necessary to find an analogues for the profit made by the firm, and … More Tentative thoughts on an extension of the Peltzman model

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The Peltzman Model of Regulatory Capture

  Let the political support function (M) be described by: M = M(p, Π) Where p is price established for the regulated service (e.g., electricity) by the regulatory authority (e.g., the New York Public Service Commission)  and Π  is the level of profit earned by the regulated firm (e.g., New York Edison) at that level. M falls with p … More The Peltzman Model of Regulatory Capture