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Legislators v. Regulators: The Case of Low Power FM Radio

Published online by Cambridge University Press:  20 January 2017

Thomas W. Hazlett  and
Bruno E. Viani
Thomas W. Hazlett
Affiliation:
Manhattan Institute and The Wharton School
Bruno E. Viani
Affiliation:
Franklin and Marshall College
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Abstract

The Federal Communications Commission rule making for low power FM radio was widely reported as an instance where Congress sharply rebuked a regulatory agency for enacting rules too favorable to entrants. Theories of bureaucratic control generally agree that when such events occur, policy differences of Congress and the agency must be large. Because rival policy positions are quantifiable in this case, the preferences of Congress and the Commission can be directly evaluated. While the distance between the policy position of the Commission and Congress appear large, they signified a negligible increment in competition when compared to a benchmark efficient policy. A financial event study supports this interpretation, as radio broadcaster's equity values were not materially affected by either events in Congress or the Commission. Thus, even marginal differences may prompt a costly intervention by Congress to ostensibly discipline an agency.

Keywords

bureaucratic controlregulatory processbroadcasting policy
Type
Research Article
Information
Business and Politics , Volume 7 , Issue 1 , April 2005 , pp. 1 - 31
Copyright
Copyright © V.K. Aggarwal 2005 and published under exclusive license to Cambridge University Press 

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