A Property Rights Approach to Legislative Delegation

Abstract

This paper applies the property rights theory to study both positive and normative aspects of legislative delegation in a setup where interest groups directly influence lawmaking by initiating regulatory bargaining. A self-interested legislature choosing between the direct exercise of its legislative authority and delegation to an administrative agency must therefore trade off the value of bureaucratic competence against bureaucratic drift and, importantly, loss of control over bargaining. Our analysis, first, clarifies when the legislature's choice between delegation and no delegation is socially efficient or socially inefficient; second, illustrates the role of political bargaining and shows that precluding interest group influence through bargaining may actually increase the scope for socially inefficient outcomes; third, develops novel predictions on the type of policy issues that we should observe get delegated; and, fourth, reflects on the practice of the scant empirical work on legislative delegation.