How do Federal Regulations affect Consumer Prices? An Analysis of the Regressive Effects of Regulation

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JournalPublic Choice
DateAccepted/In press - 6 Sep 2017
DateE-pub ahead of print - 9 Oct 2017
DatePublished (current) - 1 Jul 2019
Issue number1-2
Volume180
Number of pages34
Pages (from-to)57-90
Early online date9/10/17
Original languageEnglish

Abstract

This study is the first to measure the impact of federal regulations on consumer prices. By combining consumer expenditure and pricing data from the Bureau of Labor Statistics, industry supply-chain data from the Bureau of Economic Analysis, and industry-specific regulation information from the Mercatus Center’s RegData database, we determine that regulations promote higher consumer prices, and that these price increases have a disproportionately negative effect on low-income households. Specifically, we find that the poorest households spend larger proportions of their incomes on heavily regulated goods and services prone to sharp price increases. While the literature explores other specific costs of regulation, noting that higher consumer prices are a probable consequence of heavy regulation, this study is the first to provide a thorough empirical analysis of that relationship across industries. Irrespective of the reasons for imposing new regulations, these results demonstrate that in the aggregate, the negative consequences are significant, especially for the most vulnerable households.

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© Springer Science+Business Media, LLC 2017. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

    Research areas

  • Consumer Expenditure Survey, Consumer prices, Distributional effects, Federal regulations, RegData, Regressive effects, Regulation

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