סמינר באסטרטגיה

Speaker: Yehonatan Givati from the Hebrew University

Abstract: 

Across areas of law administrative agencies employ four basic policy-making

instruments: rulemaking, adjudication, advance ruling and licensing.

How should administrative agencies choose among these policymaking

instruments? I develop a model which captures the idea that

rules are inherently incomplete, and focuses on the strategic interaction

between agencies and firms. While rule-making allows agencies to commit

to a policy, it does not allow the policy to be narrowly tailored to the

circumstances of specific firms. Adjudication allows agencies to harness

information that firms have to narrowly tailor the policy to their circumstances,

but since under it the policy is adopted after firms have already

acted, two time-inconsistency problems arise. Supplementing adjudication

with advance ruling eliminates one of these problems. Licensing eliminates

both problems, but only by requiring costly licenses even in cases where

they do not arise. Agencies’ choice of policy-making instrument depends

on firm heterogeneity and the cost of pre approval procedures.