Meetings with Costly Participation: An Empirical Analysis

Abstract

We analyse a firm’s decision to participate in public meetings which determine regulation. Using data from the Mid-Atlantic surf clam and ocean quahog fishery, we find that firms with a preference for extreme policies are much more likely to participate in public meetings than firms with a preference for moderate policies. We also find that participation rates are higher for larger, closer, and more influential firms. These results are of interest for several reasons. Voluntary meetings with costly participation are ubiquitous as an institution for resource allocation. Examples include: faculty meetings, parent teacher association meetings, and condominium association meetings. Moreover, the requirement that regulators allow and encourage public participation is an almost universal feature of the U.S. regulatory process. 1 Yet, despite their importance, meetings with costly participation are little studied, and basic questions about them are unanswered: Who goes? Does participation vary with observable characteristics? Do meeting participants represent the interested population? Our analysis of the Mid-Atlantic clam fishery answers these questions: large, nearby extremists participate in meetings with costly participation. It is clear that these findings improve our understanding of voluntary participation in costly meetings, and hence of most regulatory decisions taken in the U.S. However, they also suggest 1. The Administrative Procedure Act requires that all U.S. federal regulatory agencies “shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without the opportunity for oral presentation” (Title 5 U.S. Code Section 553(c), 1988 edition). In Corrosion Proof Fittings v. Environmental Protection Agency (1991) the Supreme Court showed its willingness to require that public opinion be adequately consulted. (In this case, the court vacated proposed regulation because the Environmental Protection Agency prematurely ended public hearings and deprived the public of sufficient opportunity to “comment [on], analyse, and influence the [regulatory] proceedings”. In this case public participation is mandated by the Toxic Substances Control Act rather than the Administrative Procedure Act.)