Elise S. Brezis


Professor of Economics


Curriculum vitae



Head, Forum Macro of Israel


Department of Economics


Bar-Ilan University, Israel



Regulating the revolving door of regulators


Working paper


Elise S. Brezis
Bar Ilan University, 2022 Nov

View PDF
Cite

Cite

APA
Brezis, E. S. (2022). Regulating the revolving door of regulators.

Chicago/Turabian
Brezis, Elise S. “Regulating the Revolving Door of Regulators” (November 2022).

MLA
Brezis, Elise S. Regulating the Revolving Door of Regulators. Bar Ilan University, Nov. 2022.


Abstract

This paper analyzes whether regulating the revolving door is optimal from the point of view of society. The model focuses on the tradeoff between two elements linked to the revolving door. On the one hand, the revolving door enables hiring regulators which are highly-qualified individuals from the perspective of a future compensation package.

On the other hand, the revolving door enables regulators to be greedy, and receive revenues after their term in office. There are two distinct motives for being greedy. The first is the 'capture' motive; a motive which is unlawful and should not be allowed.

The second motive is the 'abuse of power', which is legal, although unethical. Since there is a tradeoff between the positive effects of the revolving door (higher qualified regulators) and the negative effects of the revolving door (greed), the optimal solution for the economy is to allow the revolving door practice.

This paper highlights that distinguishing whether a behavior is unlawful or unethical is of utmost importance for analyzing the optimal policy concerning regulators. Models of capture require that the revolving door should be regulated in order to prevent corruption, while models of abuse of power, allow the revolving door practice.

Keywords: bureaucratic capital, compensation package, corruption, ethics, legal system, revolving door, social norms