Corporate Design for Regulability: A Principal-Agent-Supervisor Model

Corporate actors differ from individuals in that it may be possible to observe the formation of the corporate will from outside, and to influence its formation. This feature can be exploited by regulators. One technique is inducing corporate actors to hire an interface actor, representing the regulatory cause in the interior of the firm. Vice versa, firms may induce the regulator to give an interface actor access to the regulatory arena. This interface actor has the task of representing the commercial cause in regulatory decision-making. The paper uses a principal-agent-supervisor model to analyze the setting.