The purpose of this paper is to explore empirically some of the key propositions that can be derived when one combines insights from Public Choice and Austrian economics. We call this approach Austrian Public Choice. These key propositions are (1) that political markets are dynamic processes driven by the action of suppliers and demanders of public policies behaving as entrepreneurs, (2) that these political entrepreneurs are ignorant ex ante of factors that can matter as the regulatory process unfolds, suggesting that they imperfectly anticipate what will ultimately matter for policy decisions, and (3) that these political entrepreneurs learn over time and use local knowledge to discover future opportunities in political markets. Using a dataset of utility initiated rate reviews in the U.S. electricity industry, we find support for these propositions, which suggests that Austrian economics could shed new lights on questions typically raised by Public Choice scholars.
Available at: http://works.bepress.com/jean_philippe_bonardi/15/