Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission

TLDR

The study tests whether regulatory agencies act independently or are controlled by Congress, extending Stigler and Peltzman’s framework by incorporating legislative influence. The authors compare two models—agency discretion versus congressional control—using FTC case data to evaluate the role of Congress in agency decisions. The model’s comparative statics produce testable predictions, and empirical analysis of FTC actions confirms systematic congressional influence.

Abstract

This paper extends Stigler and Peltzman's approach to regulation by incorporating a legislature. The model yields comparative statics results and hence testable implications. The paper then tests between two opposing approaches about regulatory agency behavior. The first assumes agencies operate independently of the legislature and hence exercise discretion; the second assumes that Congress controls agency decisions. The recent behavior of the Federal Trade Commission provides the empirical setting. Substantial evidence is found for the specific predictions of the model, including the hypothesis of systematic congressional influence over FTC decisions.