Career Concerns, Inaction and Market Inefficiency: Evidence From Utility Regulation

Severin Borenstein*, Meghan R. Busse, Ryan Kellogg

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


We study how incentive conflicts known as 'career concerns' can generate inefficiencies not only within firms but also in market outcomes. Career concerns may lead agents to avoid actions that, while value-increasing in expectation, could potentially be associated with a bad outcome. We apply this theory to natural gas procurement by regulated public utilities and show that career concerns may lead to a reduction in surplus-increasing market transactions during periods when the benefits of trade are likely to be greatest. We show that data from natural gas markets are consistent with this prediction and difficult to explain using alternative theories.

Original languageEnglish (US)
Pages (from-to)220-248
Number of pages29
JournalJournal of Industrial Economics
Issue number2
StatePublished - Jun 2012

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)
  • Economics and Econometrics


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