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Applied and bridge studies study record
Decision Accounting & recordsMicrofoundations of Fiscal Capture and Conflictoring: A Laffont-Tirole Derivation
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
the paper contributes to this literature by showing how fiscal dependence affects regulatory outcomes. The model predicts that fiscal dependence on harmful industries reduces regulatory capacity, which is consistent with the empirical evidence on state capacity and resource dependence (VERIFY: Ross, 2001; Sachs & Warner, 2001). The model also predicts that fiscal dependence creates a Conflictoring equilibrium that resists reform, which is consistent with the literature on path dependence and institutional lock-in (VERIFY: Pierson, 2000; North, 1990)
WHAT'S NEW · The fiscal capture threshold φ is derived endogenously from a principal-agent model, not assumed. φ decreases with social harm h and increases with per-unit fiscal contribution τ. Conflictoring emerges as an equilibrium property when fiscal weight β > 0. The regulator's optimal output increases monotonically with fiscal dependence.
The paper derives the Fiscal Capture threshold (φ*) and Conflictoring equilibrium from a Laffont-Tirole principal-agent model, showing that fiscal capture emerges endogenously from revenue dependence. The derivation yields testable predictions and falsification conditions, strengthening the theoretical foundations of the canon.