This paper shows that the inability of regulators to commit to long-term contracts is irrelevant when there is some competition between regulated firms and when firms' private information is correlated. This sharply contrasts with the dynamic of regulation without such competition. The paper...

Regulatory independence from political control enlarges the collusive opportunities between regulators and interest groups. This is costly for current politicians because deterring capture becomes harder. However, independence also constrains future governments. Whenever future and current...