ESSAYS ON THE POLITICAL ECONOMY OF REGULATION

Abstract

This dissertation examines regulatory frameworks in historical contexts through three distinct case studies, shedding light on the interplay between public interest and public choice factors. The first paper investigates the enactment of the Pure Food and Drugs Act of 1906 within the whiskey industry. High and Coppin (1988) argue for a public choice interpretation, suggesting regulatory capture by rectifiers to stifle competition. Our study corroborates these findings using comprehensive historical data on alcohol consumption, chemical analyses of whiskey, and archival evidence of reported deaths and poisonings. We find that while rectifiers occasionally used poisons, these substances were often misunderstood or demanded in illicit markets, bolstering the public choice perspective. The second paper explores early American whiskey markets as a case of asymmetric information, where entrepreneurs faced challenges in assuring consumers of product authenticity and safety. Despite these hurdles and public health concerns over adulteration, historical newspapers reveal four mechanisms through which entrepreneurs effectively communicated and guaranteed product quality. This analysis underscores the resilience of market-based solutions in mitigating information asymmetry. The third paper investigates the adoption of barber licensure during the Progressive Era, ostensibly to curb the spread of "barber’s itch." Using a novel dataset and a difference-in-difference model across states, we find scant evidence supporting the public health rationale for licensure. Instead, our results suggest that licensure was driven by public choice motivations, particularly efforts by barber unions to limit competition and raise prices. This study provides a rare empirical case of regulation primarily serving private interests over public health concerns. Together, these papers contribute nuanced perspectives on regulatory frameworks, highlighting instances where public interest justifications intersect with or are overshadowed by public choice dynamics. The findings underscore the complex motivations underlying regulatory policies and offer insights into their implications for industry, consumer welfare, and economic governance.