Institutions and Policy Determination: Recent Work by Pablo Spiller
Professional Politicians - Amateur Legislators: The Argentine Congress in the XXth Century
A Positive Theory of Administrative Procedures
Strategic Instruments: Legal Structure and Political Games in Administrative Law
During my sabbatical year, at the CEDI (Center for the Study of Institutional Development) at the Universidad San Andres y Buenos Aires, I focused on developing a theory of Institutions and Public Policy Determination. This project was applied to Argentina, and will come out as a book. For a copy of its most recent version please contact my co-author, and Academic Director of the CEDI, Mariano Tommasi.
Professional Politicians - Amateur Legislators: The Argentine Congress in the XXth Century
by
Mark Jones, Sebastian Saiegh, Pablo T. Spiller and Mariano Tommasi
American Journal of Political Science, 2002: pp:656-669
Abstract
The Argentine Congress plays a limited role in the production of public policy and is a relatively ineffective check on the Argentine Executive Branch. We argue this is the combined result of incentives created by several features of Argentine political institutions. In this paper we emphasize the role of the country’s electoral rules, which place the legislator reelection decision not in the hands of the voters, but rather in the hands of the provincial governor/party boss(es). These rules limit legislators’ ability to develop a professional legislative career and reduce their incentives to specialize and to develop strong legislative institutions. We provide empirical evidence of the short duration of congressional careers, the province-based nature of Argentine political careers, and the lack of specialization among legislators resulting from the above-mentioned institutional incentives.
A Positive Theory of Administrative Procedures
by
Rui deFigueiredo, Pablo T.
Spiller and Santiago Urbiztondo
Journal of Law, Economics & Organization, 1998
Abstract
A number of scholars have identified the important role administrative
procedures have in structuring the interest group environment of government
agencies: determining who can participate and in what manner. Using
a formal model, we analyze the incentives and outcomes that different procedural
- and therefore interest group - environment generate. The model
yields a number of important conclusions. First, because elected
officials are concerned not only about distributional rents, but also informational
ones, the use of procedures in some cases will result in worse outcomes
for political principals on the policy dimension. Officials will
be willing to bear the losses in exchange for informational gains.
Second, under certain conditions, a politician is better off with a biased
group monitoring the agency rather than a neutral one, since biased groups
will subsidize a portion of the monitoring cost. Third, having multiple
interest groups, including one in opposition to the politician, makes the
political principal strictly better off than any other constellation of
monitors, since competing interest groups will provide the greatest information
at the lowest cost to the elected official.
by
Pablo T. Spiller and Emerson
H. Tiller
Journal of Law Economics and Organization, July 1999
In making policy and legal decisions, regulators and judges do more than
choose policies or apply legal doctrines. They also make choices about
the instruments through which a policy or legal decision is made. These
choices are often so critical to the viability of the administrative or
legal decision that they have taken on strategic significance for regulators
and judges. They are strategic in that an originating actor choosing one
instrument over another can affect the ability of a competing actor to
review and override the originating actor's policy decision. Decision costs
are a key component of the strategic calculus. Resource constrained actors
may trade off their own institutional efficiency, which could be achieved
best through one particular instrument for a more burdensome choice, but
which imposes even greater relative decision costs on competing actors.
It is this imposition of decision cost on other political institutions
which creates the discretionary boundaries for a policy seeking actor.
In this paper we provide a framework to understand the choice of administrative
and judicial instruments by agencies and courts, and to understand their
changes over time. Our approach has two basic tenets: First, administrative
and judicial decision making is costly and is undertaken in an environment
with limited resources. Second, different administrative and judicial instruments
result in differential decision costs to the decision maker and impose
differential costs on the reviewing entity. As the political control of
one institution comes in conflict with another, imposing decision costs
on the other institution is often a successful strategy for protecting
important policy choices. Our framework would suggest that shifting political
control among the courts and agencies account for some of the trends in
the use of particular instruments.
by
Pablo T. Spiller
USC Law Review, 1996
A major task of political entrepreneurship is to signal the credibility
of proposed reforms. Without credibility, the expectation of a future policy
reversal may become a self-fulfilling prophecy, defeating the purpose of
the reform. Nowhere is the problem of credibility more important than in
the worldwide movement towards reform in the utility sector. Since utility
investments are very long lived, reforms that fail to signal their sustainability
will not trigger long term investment nor yield the expected results in
terms of higher quality and lower prices. Disappointment, though, may easily
turn into political backlash against reform. Much of the recent work on
administrative procedures in the United States has attempted to show how
a major purpose of administrative procedures is to provide credibility
and time consistency to the intended reforms.
The purpose of this article is to extend the above insight in several
dimensions. First, to implement this insight to utilities, where the problem
of regulatory commitment is extreme. Second, to show, in the framework
of utility regulation, that the nature of the regulatory instruments that
provide credibility to the regulatory structure depends on the nature of
the underlying electoral rules and institutional structure of the country
in question. In particular in this paper I will show that the US style
of regulation, through its heavy dependence on administrative law, may
fail to provide the necessary commitment in countries whose electoral rules
and system of government grant too much power to a single, and alternating,
party. Third, to describe how various countries have used different regulatory
instruments in ways that are consistent with the main hypothesis presented
here. Finally, because, as we discuss below, the role of the judiciary
is crucial for regulatory credibility, in this paper I start the development
of an evolutionary theory of judicial review and develop its implications
for policy sustainability.
by
Pablo T. Spiller
Industrial and Corporate Change, 1996
The thrust of this essay is that to understand the roles institutions play in society, a deep analysis of opportunism and its implications is necessary. For that purpose I develop a transactions costs-cum-positive political theory approach. I focus here on the role of institutions and their implications for regulatory commitment. A major issue is restraining political opportunism. Countries that have succeeded in developing a healthy private sector are those that have developed institutions that restrain governmental decision making. But such restraining is itself a political choice. Countries with electoral and legislative systems that bring about decentralized government have stronger chances of developing equilibria where government discretion is restrained.
by
Brian Levy and Pablo T. Spiller
Journal of Law, Economics and Organization, 1994
This paper explores comparatively the impact of core political and social institutions on telecommunications regulatory structures and utility performance outcomes in five countries -- Argentina, Chile, Jamaica, the Philippines and the United Kingdom. Utilities privatization and regulatory reform are increasingly billed as the way to improve service quality and to lower prices. In this paper, we argue that such expectations may not always be attainable. In particular, looking at the problem of utilities regulation through the lens of transaction cost economics -- with its micro-analytical perspective, its emphasis on discriminating alignment and remediableness, and its view of regulation as a contracting problem -- provides an understanding of the determinants of performance of privatized utilities in different political and social circumstances. Our objective is to highlight how political institutions interact with regulatory processes and economic conditions in exacerbating or ameliorating the potential for administrative expropriation or manipulation, and hence determining the economic performance of the sector. We argue in this paper that the credibility and effectiveness of a regulatory framework --and hence its ability to facilitate private investment-- varies with a country's political and social institutions. Further, we argue that performance can be satisfactory with a wide range of regulatory procedures, as long as three complementary mechanisms restraining arbitrary administrative action are all in place: a) substantive restraints on the discretion of the regulator; b) formal or informal constraints on changing the regulatory system; and c) institutions that enforce the above formal-- substantive or procedural --constraints. Our evidence suggests that regulatory commitment can indeed be developed in what appears to be problematic environments, that without such commitment long-term investment will not take place, that achieving such commitment may require inflexible regulatory regimes that go against prevailing academic views, that in some cases public ownership of utilities is the default mode of organization, and furthermore, that it may be the only feasible alternative. Political and social institutions not only affect the ability to restrain administrative action, but also have an independent impact on the type of regulation that can be implemented, and hence on the appropriate balance between commitment and flexibility. For example, relatively efficient regulatory rules (e.g., price caps, incentive schemes, use of competition) usually require granting substantial discretion to the regulators. Thus, unless the country's institutions allow for the separation of arbitrariness from useful regulatory discretion, systems that grant too much administrative discretion may not generate the high levels of investment and welfare expected from private sector participation. Conversely, some countries might have regulatory regimes that drastically limit the scope of regulatory flexibility. Although such regulatory regimes may look inefficient, they may in fact fit the institutional endowments of the countries in question, and may provide substantial incentives for investment. These results may be especially relevant for the design of regulatory policy in developing, newly industrializing and previously socialist countries, where lack of economic development may be related to a generalized lack of administrative restraints. But the results are also relevant in understanding the historical evolution of utilities regulation and ownership in developed countries. Indeed, restraining regulatory discretion seems to be behind the development of regulatory institutions in developed countries as well.
by
Pablo T. Spiller and Ingo Vogelsang
Journal of Institutional and Theoretical Economics, 1997
Abstract
The purpose of this paper is to provide an answer to the following puzzle. Given that UK governments have, in principle, so much administrative discretion, how were the Conservative governments of the 1980s able to privatize the telecommunications, electricity, water, gas and airport sectors? In other words, why were private investors willing to undertake large amounts of new investments in sectors so prone for administrative expropriation? The main thrust of this paper is that the answer resides in the subtle use of processes and other traditional institutional arrangements that substantially restrict regulatory discretion in the UK. These institutional arrangements are essentially based on the UK judiciary's respect for contracts and contract law. Thus, as in McCubbins, Noll and Weingast (1987, 1989), regulatory commitment arises from the interaction of structure and process. While institutional structure can be thought as exogenous to the regulatory game, the design of regulatory process is not. Our main hypothesis is that the regulatory process in the UK was designed to achieve substantial regulatory credibility given the particular hazards inherent to the nature of the UK institutional endowment. We also contrast the workings of our model to the evolution of regulation in the UK telecommunications sector. We find that under simple assumptions about preferences of the relevant players, the model is consistent with the evolution of telecommunications regulation.