Open Access Senior Thesis
Bachelor of Arts
© 2012 Neil K. Malani
A vast literature acknowledges the corruptibility of regulators; however, empirical tests on the matter have been limited to two-agent models examining the rulemaking process and price regulation of natural monopolies. It remains an open question whether political contributions, by driving legislative pressure, can entice laxity from regulators in their application of the rules. To remedy this issue, I observe the highly-regulated coal mining industry for which there exists several points for inspector discretion. By comparing the outcomes with Congressional coal mining contribution levels, I am able to ascertain capture across several dimensions. Specifically, I find that contributions are associated with agency inspectors using their discretion to preempt violations requiring follow-up inspection, grant more inspections to waive safety requirements, conduct shorter inspections, and grant lower penalties. It is troubling that these findings occur at relatively low levels of contributions, suggesting a high level of corruptibility on the part of regulators.
Malani, Neil K., "Do Political Contributions Purchase Regulatory Discretion in Mining Inspections?" (2012). CMC Senior Theses. 500.