Statistical Evidence

Democratic Governance Probably Went Too Far in at Least One Important Sector
  • Dino Falaschetti
Part of the Studies in Public Choice book series (SIPC, volume 14)

The title of this book, Democratic Governance and Economic Performance, may (at least before the colon) give rise to expectations of confirming our conventional wisdom about democracy. Indeed, as we have documented in previous chapters, popular media and even academic scholarship have characterized democracy as a one-way street to improved social welfare. But our robust theoretical framework from Chapter 1 shows that democracies can become more concerned about electoral distributions than general opportunities. And in the event that democratic governance goes too far in this manner, that chapter also offers formal guidance as to what we should see as evidence of shrinking opportunities.

In this chapter, we will examine data from the “natural laboratory” that the US local exchange sector offers and find persistent evidence that this (up to now) principled concern about democracy going too far is more than a theoretical curiosity. To start, we will see that output in this sector has...


Economic Performance Coefficient Estimate Real Option Federal Communication Commission Voter Turnout 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Abel, Jaison R. (2002). Entry into regulated monopoly markets: The development of a competitive fringe in the local telephone industry. Journal of Law & Economics, 45(2, Part 1), 289–316.CrossRefGoogle Scholar
  2. Alesina, Alberto and Guido Tabellini (1990). A positive theory of fiscal deficits and government debt. Review of Economic Studies, 57(3), 403–414.CrossRefGoogle Scholar
  3. Alesina, Alberto and Guido Tabellini (2007). Bureaucrats or politicians? Part I: A single policy task. American Economic Review, 97(1), 169–179.CrossRefGoogle Scholar
  4. Altonji, Joseph G., Todd E. Elder, and Christopher R. Taber (2005). Selection on observed variables: Assessing the effectiveness of catholic schools. Journal of Political Economy, 113(1), 151–184.CrossRefGoogle Scholar
  5. Angrist, Joshua D. and Alan B. Krueger (1991). Does compulsory school attendance affect schooling and earnings? Quarterly Journal of Economics, 106(4), 979–1014.CrossRefGoogle Scholar
  6. Angrist, Joshua D. and Alan B. Krueger (1995). Split-sample instrumental variables estimates of the return to schooling. Journal of Business and Economic Statistics, 13(2), 225–235.CrossRefGoogle Scholar
  7. Angrist, Joshua D. and Alan B. Krueger (2001). Instrumental variables and the search for identification: From supply and demand to natural experiments. Journal of Economic Perspectives, 15(4), 69–85.CrossRefGoogle Scholar
  8. Arnold, R. Douglas (1991). The Logic of Congressional Action. New Haven and London: Yale University Press.Google Scholar
  9. Averch, Harvey and Leland L. Johnson (1962). Behavior of the firm under regulatory constraint. American Economic Review, 52(5), 1052–1069.Google Scholar
  10. Bailey, Michael (2004). The (sometimes surprising) consequences of societally unrepresentative contributors on legislative responsiveness. Business and Politics, 6(3), 1–34.CrossRefGoogle Scholar
  11. Besley, Timothy and Anne Case (2003). Political institutions and policy choices: Evidence from the United States. Journal of Economic Literature, 41(1), 7–73.CrossRefGoogle Scholar
  12. Besley, Timothy and Stephen Coate (2003). Elected versus appointed regulators: Theory and evidence. Journal of the European Economic Association, 1(5), 1176–1206.CrossRefGoogle Scholar
  13. Brock, Gerald W. (1994). Telecommunications Policy for the Information Age. Cambridge and London: Harvard University Press.Google Scholar
  14. Corrado, Anthony (2000). Campaign Finance Reform: Beyond the Basics. New York: The Century Foundation.Google Scholar
  15. Corrado, Anthony, Thomas E. Mann, Daniel R. Ortiz, Trevor Potter, and Frank J. Sorauf (1997). Campaign Finance Reform: A Sourcebook. Washington, DC: Brookings Institution Press.Google Scholar
  16. Council of State Governments (1999). The Book of the States, 1998–99 Edition, Volume 32. Lexington, KY: Council of State Governments.Google Scholar
  17. Crandall, Robert W. and Hal J. Singer (2007). Telecom time warp. Wall Street Journal, July 11, A15.Google Scholar
  18. Falaschetti, Dino (2003). Can latent groups influence policy decisions? The case of telecommunications policy. Journal of Law, Economics, & Organization, 19(1), 83–105.CrossRefGoogle Scholar
  19. Falaschetti, Dino (2005). Can electoral mobility diminish economic performance? Evidence from the US telecommunications sector. SSRN Working Paper, October 11. doi: 10.2139/ssrn.413583Google Scholar
  20. Falaschetti, Dino (2007). Electoral accountability and consumer monopsonists: Evidence from elected vs. appointed regulators. SSRN Working Paper, July 24. doi: 10.2139/ssrn.645401.Google Scholar
  21. Federal Election Commission. Accessed 31 July 2003.
  22. Feigenbaum, Edward D. and James A. Palmer (2000). Campaign Finance Law 2000: A Summary of State Campaign Finance Laws with Quick Reference Charts. Washington, DC: Federal Election Commission.Google Scholar
  23. Gelbach, Jonah (2004). When do covariates matter? And by how much? University of Maryland, Department of Economics, Working Paper.Google Scholar
  24. Geospatial and Statistical Data Center (GEOSTAT). Charlottesville, VA: University of Virginia Library. Accessed 2003 July 31.Google Scholar
  25. Gilbert, Richard J. and David M. Newbery (1994). The dynamic efficiency of regulatory constitutions. RAND Journal of Economics, 25(4), 538–554.CrossRefGoogle Scholar
  26. Greenberger, Robert S. (2003). Supreme court appears divided on campaign-finance measure. Wall Street Journal, September 9, A3, A18.Google Scholar
  27. Hahn, Jinyong and Jerry Hausman (2002). Weak instruments: Diagnosis and cures in empirical econometrics. Mimeo, MIT, December.Google Scholar
  28. Hanssen, F. Andrew (2004). Is there a politically optimal level of judicial independence? American Economic Review, 94(3), 712–729.CrossRefGoogle Scholar
  29. Hatfield, John and Gerard Miquel (2006). Multitask political agency. Working paper, Stanford University Graduate School of Business.Google Scholar
  30. Hausman, Jerry (1997). Valuation and the effect of regulation on new services in telecommunications. Brookings Papers on Economic Activity: Microeconomics.Google Scholar
  31. Henisz, Witold J. and Bennet A. Zelner (2001). The institutional environment for telecommunications investment. Journal of Economics and Management Strategy, 10(1), 123–148.CrossRefGoogle Scholar
  32. Highton, Benjamin (1997). Easy registration and voter turnout. Journal of Politics, 59(2), 565–575.CrossRefGoogle Scholar
  33. Holburn, Guy L. F. and Pablo T. Spiller (2002). Interest group representation in administrative institutions: The impact of consumer advocates and elected commissioners on regulatory policy in the United States. University of California Energy Institute (UCEI), Energy Policy and Economics Working Paper.Google Scholar
  34. Jolis, Anne (2007). EU telecom regulation may hurt invest in new tech – report. Dow Jones Newswires. Accessed 14 September 2007.Google Scholar
  35. Levitt, Steven D. and James M. Poterba (1999). Congressional distributive politics and state economic performance. Public Choice, 99(1–2), 185–216.CrossRefGoogle Scholar
  36. Levy, Brian and Pablo T. Spiller (1994). The institutional foundations of regulatory commitment: A comparative analysis of telecommunications regulation. Journal of Law, Economics, and Organization, 10(2), 201–246.Google Scholar
  37. Noll, Roger G. (1986). State regulatory responses to competition and divestiture in the telecommunications industry. In Ronald E. Grieson (Ed.), Antitrust and Regulation, (pp. 165–200) Lexington, MA: Lexington Books.Google Scholar
  38. Panteghini, Paolo M. and Carlo Scarpa (2003). Irreversible investments and regulatory risk. CESifo Working Paper No. 934.Google Scholar
  39. Patterson, Samuel C. and Gregory A. Caldeira (1983). Getting out the vote: Participation in gubernatorial elections. American Political Science Review, 77(3), 675–689.CrossRefGoogle Scholar
  40. Persson, Torsten and Lars E. O. Svensson (1989). Why a stubborn conservative would run a deficit: Policy with time inconsistent preferences. Quarterly Journal of Economics, 104(2), 325–345.CrossRefGoogle Scholar
  41. Pindyck, Robert S. (2003). Mandatory unbundling and irreversible investment in telecom networks. MIT Sloan School of Management Working Paper 4452–03 (December).Google Scholar
  42. Riker, William (1980). Implications from the disequilibrium of majority rule for the study of institutions. American Political Science Review, 74, 432–446.CrossRefGoogle Scholar
  43. Sankar, U. (1972). Investment behavior in the US electric utility industry, 1949–1968. Bell Journal of Economics and Management Science, 3(2), 645–664.CrossRefGoogle Scholar
  44. Sappington, David E. M. (2002). Price regulation and incentives. In Martin E. Cave, Sumit K. Majumdar, and Ingo Vogelsang (Eds.), Handbook of Telecommunications Economics, Volume 1 (pp. 225–293). Amsterdam: Elsevier Science B.V.Google Scholar
  45. Smart, Susan R. (1994). The consequences of appointment methods and party controls for telecommunications pricing. Journal of Economics and Management Strategy, 3(2), 301–323.CrossRefGoogle Scholar
  46. Spiller, Pablo T. (1996). Institutions and commitment. Industrial and Corporate Change, 5(2), 421–452.Google Scholar
  47. Squeo, Anne Marie and Shawn Young (2004). Court overturns rules governing local telephone competition. Wall Street Journal, March 3, A1, A12.Google Scholar
  48. Trends in Telephone Service (2002). Washington, DC: Federal Communications Commission. Available at Accessed 31 July 2003.
  49. Wallsten, Scott (2007). Towards effective US broadband policies. Progress & Freedom Foundation Progress on Point Paper No. 14.7.Google Scholar
  50. Wolfinger, Raymond E. and Steven J. Rosenstone (1980). Who Votes? New Haven: Yale University Press.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Florida State UniversityTallahasseeUSA
  2. 2.Hoover InstituteStanford UniversityStanfordUSA

Personalised recommendations