Jj. Laffont et D. Martimort, TRANSACTION COSTS, INSTITUTIONAL DESIGN AND THE SEPARATION OF POWERS, European economic review, 42(3-5), 1998, pp. 673-684
The internal organization of the government can be used as a constrain
t on the capture of political decision makers in a setting where multi
ple interest groups try to influence policy outcomes. Centralization,
i.e., the choice of a single agency dealing with all interest groups i
s costly because it induces a better coordination of their influences.
The choice of specialized agencies is better because it increases the
overall transaction costs of capture, making agencies more immune to
capture by interest groups. More generally, we discuss how an institut
ional design relying on separation of powers among specialized agencie
s may improve policy outcomes. (C) 1998 Elsevier Science B.V. All righ
ts reserved.