Abstract
As decentralization is pushed forward, it might seem that its opportunity for exercising discretion will increase more and more in the process of policy-making. The process of policy-making in local government is influenced by intentions of a council, inhabitants and the firm as well as the regulator. It might be thought that the influences each agent has on the process of policy-making, that is to say, “the bargaining power” would play a crucial role in it.This paper focuses on the relationship between regulator and the regulated firm among each of the agents involved in the process of policy-making; hence evaluating their bargaining power. Although people realise the necessity of deregulation nowadays, it has been pointed out that the firm's demand for regulation prevents this from occurring. By lobbing for regulator, for example, lobbying for the offer of post-commission job, finance aid for a public foundation among other lucrative incentives, it can be seen that the firm is in a situation of being able to influence the regurator to make a favourable ruling.In this paper, assuming that the firm's bargaining power is determined by the quantity of the lobbying above, it analyzes that the relationship of the process of policymaking in local government and social welfare in the framework of the bargaining power being endogenously determined in the model.
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