Bureaucratic

Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the FederalTrade CommissionAuthor(s): Barry R. Weingast and Mark J. MoranSource: The Journal of Political Economy, Vol. 91, No. 5 (Oct., 1983), pp. 765-800Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/1837369Accessed: 04/11/2010 04:46By purchasing content from the publisher throughthe Service you agree to abide by the Terms and Conditions of Use, availableathttp://www.jstor.org/page/info/about/policies/terms.jsp. These Terms and Conditions of Use provide, in part, that this Service isintended to enable your noncommercial use of the content. For other uses, please contact the publisher of the journal. Publishercontact information may be obtainedathttp://www.jstor.org/action/showPublisher?publisherCode=ucpress.Each copy of any part of the content transmitted through this Service must contain the same copyright notice that appears onthe screen or printed page of such transmission.For more information regarding this Service, please contact service@jstor.org.The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to TheJournalof Political Economy.http://www.jstor.org
Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission Barry R. Weingast Washington University Mark J. Moran Case Western Reserve University This paper extends Stigler and Peltzman's approach to regulation by incorporating a legislature. The model yields comparative statics re-sults and hence testableimplications. The paper then tests between two opposing approaches about regulatory agency behavior. The first assumes agencies operate independently of the legislature and hence exercise discretion; the second assumes that Congress controls agency decisions. The recent behavior of the Federal Trade Coln-mission provides the empirical setting. Substantial evidence is found for the specificpredictions of the model, including the hypothesis of systematic congressional influence over FTC decisions. The relationship of the regulatory agencies to the political system remains an important and controversial issue. The various scholarly literatures on agency behavior are founded on widely divergent as-sumptions about agency-legislative relationships and the source of agency decisions. Given thisdivergence, the lack of systematic empir- We gratefully acknowledge the helpful comments of Lee Benham, Harold Demsetz, Forrest Nelson, Robert Parks, Kenneth Shepsle, L. G. Thomas, and the participants of workshops at the University of Chicago, University of Illinois, and the Hoover Institu-tion. Randall Calvert deserves special thanks for his role in the empirical analysis. Generous support wasprovided by the Center for the Study of American Business of Washington University. Journal of Political Economy, 1983, vol. 91, no. 5] ? 1983 by The University of Chicago. All rights reserved. 0022-3808/83/9105-0006$01.50 765
766 JOURNAL OF POLITICAL ECONOMY ical tests of opposing views is striking. One literature, focusing on the bureaucratic components of agency decisions, assumes that agenciesare relatively independent of Congress; it argues that to understand policymaking we must understand bureaucratic discretion in opera-tion. A second literature, however, rests on the opposite assumption, namely, that agencies are controlled by the Congress and that to understand regulatory policymaking we must understand legislative politics. These views clearly differ in their explanation of whyagen-cies make particular policy decisions. An unfortunate consequence of the diverse and relatively indepen-dent academic literatures on this topic is the absence of an accurate characterization of the legislative-agency relationships on which ma-jor public policy issues hinge. For example, the success of modern regulatory reform efforts such as sunset legislation and legislative veto depends...