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When does business power trump independent regulatory agencies?

Interest Groups
Political Economy
Public Administration
Regulation
Business
Cyril BENOIT
Sciences Po Paris
Cyril BENOIT
Sciences Po Paris
Takuya Onoda
Sciences Po Paris

Abstract

When do business actors get their way in regulatory spaces where crucial prerogatives have been delegated to an independent agency? While it has received some empirical treatments, this important question has yet to be fully explored. Indeed, most accounts in public administration tend to focus on how agencies deal with conflicting pressures, without paying sufficient attention to business actors themselves. In the same time, political economists often neglect the role played by institutional design and administrative arrangements in shaping, in turn, the conditions for business actors’ success. Merging recent advances from both of these literatures, this paper develops theoretical propositions to account for business actors’ fluctuating fortunes when they try to influence independent agencies. These propositions are then tested on the case of pharmaceutical regulation in France and in the UK – a sector where regulators endowed with important prerogatives face the constant pressures of a strong and influential industry. We mobilize process-tracing techniques informed by about 100 qualitative interviews to study various business-regulator interactions in different institutional and political configurations. Overall, we report findings that challenge several views widely held in the literature. We notably show that the degree of salience systematically influences the outcomes of business-regulator interactions, but in the opposite direction to what scholars have usually assumed. Indeed, business actors appear more likely to get their way when their interactions with the agency are subject to greater public scrutiny. By contrast, regulators are more likely to prevail in the realm of quiet politics – thus in quasi face-to-face interactions with firms. We explain this surprising finding by the properties of independent agencies, that incite them to prioritize their credibility over their responsiveness – creating, in turn, greater opportunities for the industry to pressure agencies’ (responsive) political principals.