TY - JOUR AU - Paiva, Claudio A. C. PY - 1994/10/01 Y2 - 2024/03/29 TI - Electoral interests and price fluctuation in regulated markets JF - Brazilian Journal of Political Economy JA - BJPE VL - 14 IS - 4 SE - DO - 10.1590/0101-31571994-0791 UR - https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1301 SP - 537-547 AB - <p>This paper builds on the theory of regulation developed by Stigler and Peltzman.<br />According to these authors, a regulator chooses his/her strategy seeking to maximize political<br />support from consumers and producers, viewing welfare and efficiency as secondary issues.<br />This process determines a regulated price that is between the competitive and monopolistic<br />levels. Our paper develops a modified version of Peltzman’s model by considering the idea<br />that the regulator’s behaviour might change with the proximity of elections. The addition<br />of a timing dimension to the problem and its implication for consumers, producers and the<br />regulator’s behavior suggest that the optimal strategy now implies in a price cycle in regulated<br />industries. The regulator has incentives to impose higher prices when elections are relatively<br />far ahead and lower (real) prices in periods that immediately precede an important election.<br />We show that the Brazilian gasoline market between 1969-1984 supports our results.</p><p><strong>JEL Classification:</strong> E31; D72; L71.</p> ER -