Regulatory System Design : Some Solutions to the Delegation Problem

We present solutions to each of the major delegation problems that arise when elected officials delegate rulemaking authority to government agencies. These problems include principal-agent issues, monopoly provision, information asymmetry, and tragedy of the commons. Rather than presenting our solutions to these problems as incremental changes to an existing system, we discuss how a regulatory system built from scratch might avoid these problems. Following our problem-specific solutions, we present a detailed structure of a regulatory process that alleviates many delegation problems simultaneously. This structure better aligns the incentives of regulators with those of legislators and with the well-being of the public. We intend the solutions and process structure presented here not to serve as a collection of proposed changes but as guideposts for those hoping to make any part of the regulatory system better attuned to the needs of the populace