Self-regulatory organizations (SROs) can be found in education, healthcare, and other not-for-profit sectors as well as in the accounting, financial, and legal professions. DeMarzo et al. (2005) show theoretically that SROs can create monopoly market power for their affiliated agents, but that governmental oversight, even if less efficient than oversight by the SRO, can largely offset such market power. We provide an experimental test of this conjecture. For carefully rationalized parameterizations and implementation details, we find that the predictions of DeMarzo et al. (2005) are borne out.
We thank Chris Bidner, Jay Pil Choi, Sebastian J. Goerg, John Hamman, Hodaka Morita, two anonymous referees as well as audience members at the ESA meetings 2011 in Luxembourg and 2012 in Cologne, the ANZ Workshop on Experimental Economics in Melbourne in 2011, the Global conference in Kuala Lumpur in 2015, the SEET workshop on Malta in 2016, and seminar participants at CERGE-EI and the University of Sydney, for very helpful comments. Financial support from research grant GA15-03488S from the Grant Agency of the Czech Republic (GACR) and the ČEPS Corporate Chair is gratefully acknowledged.
Van Koten, S. and Ortmann, A. (2016), "Self-Regulatory Organizations under the Shadow of Governmental Oversight: An Experimental Investigation", Experiments in Organizational Economics (Research in Experimental Economics, Vol. 19), Emerald Group Publishing Limited, Bingley, pp. 85-104. https://doi.org/10.1108/S0193-230620160000019003
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