John D. Huber AND Charles R. Shipan
The Costs of Control: Legislators, Agencies, and Transaction Costs
Legislative Studies Quarterly XXV:25-52

Political scientists have long studied the relationship between legislatures and agencies—in particular, between Congress and the bureaucracy in the United States. In the past two decades, however, there has been a renewed interest in this topic along with a variety of new theoretical contributions and insights. We review these relatively recent contributions and examine how transaction cost and principal-agent approaches have provided many of them with a theoretical underpinning. Specifically, we examine a series of basic concepts from these literatures and discuss how these concepts can be used both to provide theoretical advances and to suggest ­empirical tests about the relationship between legislatures and agencies.

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