How do federal regulations affect consumer prices? An analysis of the regressive effects of regulation

  • Dustin Chambers
  • Courtney A. Collins
  • Alan Krause
Article
  • 112 Downloads

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.

Keywords

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

JEL Classification

I18 D12 H23 L51 

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of Economics and FinanceSalisbury UniversitySalisburyUSA
  2. 2.Department of EconomicsRhodes CollegeMemphisUSA
  3. 3.Department of Economics and Related StudiesUniversity of YorkHeslington, YorkUK

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