Hostname: page-component-cd9895bd7-p9bg8 Total loading time: 0 Render date: 2024-12-29T20:22:33.041Z Has data issue: false hasContentIssue false
  • English
  • Français

Legislators v. Regulators: The Case of Low Power FM Radio

Published online by Cambridge University Press:  20 January 2017

Thomas W. Hazlett  and
Bruno E. Viani
Thomas W. Hazlett
Affiliation:
Manhattan Institute and The Wharton School
Bruno E. Viani
Affiliation:
Franklin and Marshall College
Get access Rights & Permissions [Opens in a new window]

Abstract

The Federal Communications Commission rule making for low power FM radio was widely reported as an instance where Congress sharply rebuked a regulatory agency for enacting rules too favorable to entrants. Theories of bureaucratic control generally agree that when such events occur, policy differences of Congress and the agency must be large. Because rival policy positions are quantifiable in this case, the preferences of Congress and the Commission can be directly evaluated. While the distance between the policy position of the Commission and Congress appear large, they signified a negligible increment in competition when compared to a benchmark efficient policy. A financial event study supports this interpretation, as radio broadcaster's equity values were not materially affected by either events in Congress or the Commission. Thus, even marginal differences may prompt a costly intervention by Congress to ostensibly discipline an agency.

Keywords

bureaucratic controlregulatory processbroadcasting policy
Type
Research Article
Information
Business and Politics , Volume 7 , Issue 1 , April 2005 , pp. 1 - 31
Copyright
Copyright © V.K. Aggarwal 2005 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bhagat, Sanjai and Romano, Roberta. 2001. Event Studies and the Law: Part II – Empirical Studies of Corporate Law. Working Paper Series. Paper 260. Yale Law School. Yale Law School John M. Olin Center for Studies in Law, Economics, and Public PolicyGoogle Scholar
Berry, Steven T. and Waldfogel, Joel. 1999. “Free Entry and Social Inefficiency in Radio Broadcasting.” Rand Journal of Economics 30 (3): 397–420.Google Scholar
BIA Financial. 1999. The State of the Industry Radio Report: Executive Summary. Chantilly, VA. http://www.biacompanies.com/state_radio.htm.Google Scholar
Binder, John J. 1985. “Measuring the Effects of Regulation with Stock Price Data.” Rand Journal of Economics 16 (2): 167–183.Google Scholar
Calvert, Randall L., McCubbins, Mathew D., and Weingast, Barry R. 1989. “A Theory of Political Control and Agency Discretion.” American Journal of Political Science 33 (3): 588–611.Google Scholar
Coase, Ronald. 1959. “The Federal Communications Commission.” The Journal of Law and Economics 2: 1–40.Google Scholar
Coase, Ronald. 1966. “The Economics of Broadcasting and Government Policy.” The American Economic Review 56 (1/2): 440–447.Google Scholar
Code of Federal Regulations [CFR]. 1999. “Title 47 Telecommunications.” (1 October, 1999) http://www.access.gpo.gov/cgi-bin/cfrassemble.cgi?title=199947.Google Scholar
Comments of 37 Concerned Economists. 2001. In the Matter of Promoting Efficient use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets. Federal Communications Commission. WT Docket No. 00–230 (7 Feb. 2001).Google Scholar
De Figueiredo, Rui J. P. Jr., 2002. “Electoral Competition, Political Uncertainty, and Policy Insulation.” American Political Science Review 96 (2): 321–333.CrossRefGoogle Scholar
Dodd, Lawrence C. and Schott, Richard L. 1979. Congress and the Administrative State. New York, New York: Wiley.Google Scholar
Efron, Bradley. 1982. The Jackknife, the Bootstrap and Other Resampling Plans. CBMS-NSF Monograph 38. Philadelphia Society of Industrial and Applied Mathematics.Google Scholar
Epstein, David and O'Halloran, Sharyn. 1999. Delegating Powers: A Transaction Cost Politics Approach to Policy Making under Separate Powers. Cambridge, Massachusetts: Cambridge University Press.Google Scholar
Fama, Eugene F. 1976. Foundations of Finance. New York, New York: Basic Books.Google Scholar
Federal Communications Commission [FCC]. 1997. Report and Order: In the Matter of Grandfathered Short-spaced FM Stations. MM Docket No. 96–120, RM 7651, FCC 97–276.Google Scholar
Federal Communications Commission [FCC]. 1999. Notice of Proposed Rule Making: In the Matter of Creation of a Low Power Radio Service. MM Docket No. 99–25, FCC 99–6.Google Scholar
Federal Communications Commission [FCC]. 2000a. Report and Order: In the Matter of Creation of a Low Power Radio Service. MM Docket No. 99–25, FCC 00–19.Google Scholar
Federal Communications Commission [FCC]. 2000b. Memorandum Opinion and Order: In the Matter of Creation of a Low Power Radio Service. MM Docket No. 99–25, FCC 00–349.Google Scholar
Federal Communications Commission [FCC]. 2001. Second Report and Order: In the Matter of Creation of a Low Power Radio Service. MM Docket No. 99–25, FCC 01–100.Google Scholar
Ferejohn, John and Shipan, Charles. 1990. “Congressional Influence on Bureaucracy.” Journal of Law, Economics, and Organization 6 (Special Issue): 1–20.CrossRefGoogle Scholar
Fiorina, Morris P. 1982. “Legislative Choice of Regulatory Forms: Legal Process or Administrative Process?” Public Choice 39: 33–66.Google Scholar
Freedman, David A. and Peters, Stephen C. 1984. “Bootstrapping a Regression Equation: Some Empirical Results.” Journal of the American Statistics Association 79: 97–106.Google Scholar
Greene, William. 1997. Econometric Analysis. 3rd Edition. Upper Saddle River, New Jersey: Prentice Hall.Google Scholar
Hammond, Thomas H. and Knott, Jack H. 1996. “Who Controls the Bureaucracy?: Presidential Power, Congressional Dominance, Legal Constraints, and Bureaucratic Autonomy in a Model of Multi-Institutional Policy-Making.” Journal of Law, Economics, and Organization 12 (1): 119–166.Google Scholar
Hazlett, Thomas W. 1990. “The Rationality of U.S. Regulation of the Broadcast Spectrum.” The Journal of Law & Economics 32 (April 1990): 133–175.Google Scholar
Hazlett, Thomas W. 1998. “Assigning Property Rights to Radio Spectrum Users: Why did the FCC License Auctions Take 67 Years?” The Journal of Law & Economics 41 (October 1998): 529–575.Google Scholar
Hazlett, Thomas W. 2001. “The Wireless Craze, The Unlimited Bandwidth Myth, The Spectrum Auction Faux Pas, and the Punchline to Ronald Coase's Big Joke: An Essay on Airwave Allocation Policy.” Harvard J. of Law and Technology 15 (Spring 2001): 335–567.Google Scholar
Johnston, Jack, and DiNardo, John. 1997. Econometric Methods. Fourth Edition. McGraw-Hill Companies.Google Scholar
Kiewiet, D. Roderick and McCubbins, Mathew D. 1991. The Logic of Delegation: Congressional Parties and the Appropriations Process. Chicago, Illinois: University of Chicago Press.Google Scholar
Leggett, Nickolaus, Leggett, Judith, and Schellhardt, Donald. 1997. Petition for a Microstation Radio Broadcasting Service (RM-9208). Manuscript. Federal Communications Commission. (26 June 1997). http://www.fcc.gov/Bureaus/Mass_Media/filings/rm9208.pdf.Google Scholar
McCubbins, Mathew D. and Schwartz, Thomas. 1984. “Congressional Oversight Overlooked: Police Patrols Versus Fire Alarms.” American J. of Political Science 28: 165–179.Google Scholar
McCubbins, Mathew D., Noll, Roger G., and Weingast, Barry R. 1987. “Administrative Procedures as Instruments of Political Control.” Journal of Law, Economics, and Organization 3 (2): 243–277.Google Scholar
McCubbins, Mathew D., Noll, Roger G., and Weingast, Barry R. 1989. “Structure and Process, Politics and Policy: Administrative Arrangements and the Political Control of Agencies.” Virginia Law Review 75: 431–482.Google Scholar
Mayhew, David R. 1974. Congress. The Electoral Connection. New Haven, Connecticut: Yale University Press.Google Scholar
Moe, Terry M. 1990. “Political Institutions: The Neglected Side of the Story.” Journal of Law, Economics, and Organization 6 (Special Issue): 213–253.CrossRefGoogle Scholar
Newey, Whitney K., and West, Kenneth D. 1987. “A Simple, Positive Semi-Definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix.” Econometrica 55 (May): 703–8.Google Scholar
Niskanen, William A. 1975. “Bureaucrats and Politicians.” The Journal of Law and Economics 18 (3): 617–643.Google Scholar
Owen, Bruce M. 1999. The Internet Challenge to Television. Cambridge, Massachusetts: Harvard University Press.Google Scholar
Rappaport, Theodore, Carter, Kirk, and Skidmore, Roger. 1999. Technical Analysis of the Low Power FM Service. Unpublished manuscript, Media Access Project, Washington, DC.Google Scholar
Rosston, Gregory L. and Steinberg, Jeffrey. 1997. Using Market-Based Spectrum Policy to Promote the Public Interest. Washington, DC: Federal Communications Commission Staff Paper.Google Scholar
Schwert, G. William. 1981. “Using Financial Data To Measure Effects of Regulation.” The Journal of Law and Economics 24 (April 1981): 121–158.Google Scholar
Skinner, J. Rodger. 1998. Petition for Rule Making: Proposal for Creation of the Low Power FM (low-power FM) Broadcast Service (RM-9242). Manuscript. Federal Communications Commission. (28 February 1998). http://www.fcc.gov/Bureaus/Mass_Media/filings/rm9242.pdf.Google Scholar
Steunenberg, Bernard. 1992. “Congress, Bureaucracy, and Regulatory Policy- making.” Journal of Law, Economics, and Organization 8 (3): 673–694.Google Scholar
Weingast, Barry and Moran, Mark. 1983. “Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission.” Journal of Political Economy 91: 765–800.Google Scholar
White, Kenneth. 1997. Shazam Econometrics Computer Program. Irwin/McGraw-Hill.Google Scholar
Wilson, James Q. 1980. The Politics of Regulation. New York, New York: Basic Books.Google Scholar
Dan Wood, B. and Waterman, Richard W. 1991. “The Dynamics of Political Control of the Bureaucracy.” The American Political Science Review 85 (3): 801–828.Google Scholar