Legislative Delegation and Two Conceptions of the Legislative Power

[Excerpt] The current federal government, with its burgeoning administrative agencies, does not embody what most Americans would recognize as the constitutional doctrine of separation of powers. This is, in part, due to the Congress’s frequent practice of delegating legislative powers to the executive branch, i.e., giving administrative agencies the power to promulgate rules regulating private behavior and having the force of law. Legislative delegation has been the subject of academic, legal, and political wrangling since the early congresses and clearly calls into question whether modern practice adheres to constitutional norms. This article discusses legislative delegation in terms of some core ideas that informed the writing and ratification of the Constitution, and then look at debates on legislative delegation from the early republic, the Progressive era, and modern times. Ultimately, this article argues that the no delegation doctrine – that legislative power cannot be delegated to the executive consistently with the Constitution – should be viewed as an important protector of constitutional values whose judicial enforcement is both desirable and practicable. In Part II, I discuss how the change in the conception of law and legislative power over the eighteenth century ought to influence how one appraises the propriety of legislative delegation. In Part III, I consider important debates over delegation occurring at critical moments in the history of delegation. Instead of focusing on the relatively familiar historical narrative of Supreme Court cases, I concentrate on the unchanging themes underlying arguments about delegation. In Part IV, I consider the main point of contention in modern discussions of delegation, namely judicial review, and evaluate assertions regarding its practicability and clarity

Greenhouse Gas Stabilisation: Principles to Guide the Formulation of Possible Targets and Policies and Measures

The Ad Hoc Group on the Berlin Mandate at its fourth session requested the Secretariat to compile proposals relating to the treatment of quantified emission limitation and reduction objectives (QELROs) and policies and measures. This paper focuses on the principles for the development of new commitments. The paper does not attempt to cover all relevant issues and is not intended to be exclusive of other ideas.

Delegated Contracting and Corporate Hierarchies

In a typical corporate hierarchy, the manager is delegated the authority to make decisions that set directions for the organization, employ subordinates and contract with external suppliers. This paper explains when such delegation of authority can be optimal, using a model of a firm with three parties: the principal, the manager and the worker. In centralization with two two-tier hierarchies, the principal designs contracts for both agents. In delegation with a three-tier hierarchy, the principal directly contracts with a delegated agent who, in turn, contracts with the other agent. We identify an environment where the principal can benefit from delegating authority to the manager, but not to the worker. Beneficial delegation arises endogenously when delegation motivates the manager to acquire valuable information, which is used for better decision-making and more efficient incentive provision to the worker. We also show how total surplus is distributed in delegation vis-à-vis centralization, document comparative statics results regarding the benefits of delegation and the distribution of total surplus, and discuss when delegation is more likely to dominate centralization.Corporate hierarchies, centralization, delegation, optimal contract

How Delegation Improves Commitment

We often use delegation as a commitment device if a government faces problems of timeinconsistency. McCallum (1995, AER P&P) challenged this practice, claiming that delegation merely relocates the commitment problem but does not solve it. In a model where delegation and specific policies are subject to the same commitment technology it is shown that McCallum’s conjecture holds if optimal ex-ante policies are fixed. However, with a flexibility-credibility trade-off delegation is both desirable and improves credibility. While delegation does not increase commitment per se it makes it more attractive and increases investments in credibility. Delegation can therefore serve as a valid commitment device.Time-inconsistency, commitment, delegation

Delegated Bargaining and Renegotiation

We examine the commitment effect of delegated bargaining when the delegation contract is renegotiable. We consider a seller who can either bargain face-to-face with a prospective buyer or delegate bargaining to an intermediary. The intermediary is able to interrupt negotiating with the buyer to renegotiate the delegation contract. We show that the time cost of renegotiation prevents a full elination of the commitment effect of delegation. Indeed, there are always gains from delegation when the players are sufficiently patient. An extension to search market environment shows that the gains from delegation are negatively related to the efficiency of search.bargaining, commitment, delegation, renegotiation, search

Arm’s Length Provision of Public Services

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompass both bureaucratic delegation from a government to a privatization agency and electoral delegation from voters to a government. We identify two powerfull effects of delegation when contracts are incomplete: The incentive effect increases the incentive part of service providers’ remuneration and we show that strategic delegation may substitute formal incentive contracts. The bargaining effect improves the bargaining position vis a vis a private firm with market power and leads to a lower price for the service.outsourcing, strategic delegation, incentives, incomplete contracting, market power, representative democracy

On the Licensing of Innovations under Strategic Delegation

This note uses a three-stage delegation-licensing-quantity game to study the licensing of a cost-reducing innovation by a patent-holding firm to its competitor. It is shown that licensing is less likely to occur under strategic delegation compared to no delegation.licensing strategic delegation

INFORMATION GATHERING, DELEGATED CONTRACTING AND CORPORATE HIERARCHIES

In a typical corporate hierarchy, the manager is delegated the authority to make strategic decisions, and to contract with other employees. We study when such delegation can be optimal. In centralization, the owner retains the authority, which fails to motivate the manager to acquire valuable information, leading to suboptimal decisions and inefficient incentive provision to the worker. Beneficial delegation should necessarily motivate the manager to acquire information, which is possible only when the authority is delegated to the manager. We also document comparative statics results regarding the benefits of delegation and discuss when delegation is more likely to dominate centralization.Corporate hierarchies, information gathering, delegation, centralization.

Competition and the Strategic Choice of Managerial Incentives: the Relative Performance Case

In this paper we study the role of market competitiveness in a strategic delegation game in which owners delegate output decisions to managers interested in the firm's relative performance. In particular we study how the optimal delegation scheme - i.e. the distortion from pure profit maximization - is affected by market concentration and the elasticity of market demand. We show that these two indexes of market competitiveness do not alter managerial incentives in the same way: while the optimal degree of delegation decreases as the market becomes less concentrated, it increases as demand becomes more elastic.Strategic delegation, relative performance, oligopoly, isoelastic demand

Government R&D funding: new approaches in the allocation policies for public and private beneficiaries

The objective of this paper is to perform a first experiment of quantitative assessment on changes in allocation mechanisms and in their underlying delegation models, using the quantitative information and the descriptions of national funding systems produced in the PRIME project funding activity. Delegation has been explored through changes in instrument portfolios and in evaluation modes, as proofs of an evolution in research governance. Some common trends can be identified: the reinforcing of both priority setting and peer review processes. The general result of our analysis is that some change in delegation modes took place, but there is not a simple transition from one delegation regime to another, while a "contract" delegation model (the NPM reform) is not detectable through project funding analysis.R/D funding, allocation policy, project funding, research governance, evaluation modes, delegation models