Regulatory capture and the price of electricity: evidence from time series estimates

Re‐estimates the famous study by Stigler and Friedland (1962) that examines the impact of regulation on the price of electricity. Employs time‐series data in the analysis, in light of recent extensions of the Stigler‐Peltzman theory of regulation. By modelling regulatory behaviour as an endogenous variable in a simultaneous system the model suggests that regulatory agencies are more likely to respond to the concerns of the firms that are being regulated. The regulatory authorities use their political power to regulate when the price of electricity (and hence,producer profits) falls over time.