Optimal Regulatory Design, Fragmentation, and Abolition

In response to my post about the optimal institutional design for merger enforcement and the problems associated with dual federal enforcement, a reader points me to this related paper by Jon Klick, Francesco Parisi, and Norbert Schulz in the International Review of Law and Economics which models alternatives for allocating decision-making across multiple agencies. One of the fundamental insights is that fragmented regulatory authority can result in actions that produce various sorts of externalities in regulatory competition. For example, in concurrent regulation, one might think of the first agency’s decision to approve a merger as increasing the size of the rents that can be extracted by the second actor. This might be a good model of the sizeable extraction achieved by the FCC in the satellite radio merger. One way to deal with, or at least mitigate, the inefficiencies associated with this sort of fragmentation is cooperation between agencies (e.g. the FTC and D...