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Regulation and the theory of legislative choice: The Interstate Commerce Act of 1887

Gilligan, Thomas W. and Marshall, William J. and Weingast, Barry R. (1989) Regulation and the theory of legislative choice: The Interstate Commerce Act of 1887. Journal of Law and Economics, 32 (1). pp. 35-61. ISSN 0022-2186. doi:10.1086/467168.

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The economic effects of federal regulation cannot be explained from congressional institutions. Two factors determine the specific pattern. The first is how interests are represented in the Congress, especially in the relevant committees. Committees matter because their members can veto proposals made by others. The second factor is bicameralism. The need to build majority support in two chambers matters when interest groups are not distributed identically across both houses. Specific interests win in the legislative process because of their representation within the political institutions. We examine the first major regulatory agency, the Interstate Commerce Commission (ICC), founded in 1887. The inception of the ICC was not solely a cartel mechanism for the railroads (as the pure capture view asserts) nor solely a mechanism to correct market abuses by the railroads (as the public interest theory maintains). The ICC provided an benefits, some to railroads and some to nonrailroad interests, notably shorthaul shippers.

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Additional Information:© 1989 by The University of Chicago. We gratefully acknowledge comments from Stan Engerman, John Hause, Keith Krehbiel, Mathew McCubbins, Terry Moe, Roger Noll, Douglass North, Mort Pincus, Kenneth Shepsle, and John Wallis; and from the seminar participants at the University of Chicago, Duke University, Stanford University, and the University of Washington. We also thank Elisabeth Case for her editorial assistance and Eric Amel and Brian Marks for their research assistance. Barry Weingast acknowledges the National Science Foundation grant SES 8617516 for partial support. Formerly SSWP 628.
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Subject Keywords:Railway systems, Voting, Regulatory legislation, Cartels, Commercial regulation, Economic regulation, Political regulation, Congressional voting, Pricing, Price regulation
Issue or Number:1
Record Number:CaltechAUTHORS:20171110-140425251
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83129
Deposited By: Jacquelyn Bussone
Deposited On:16 Nov 2017 21:32
Last Modified:15 Nov 2021 19:55

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