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The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes

A Study of Interconnect Rates in EU Telecommunications*

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Abstract

We examine the effects of public ownership and regulatory agency independence on regulatory outcomes in EU telecommunications. Specifically, we study regulated interconnect rates paid by entrants to incumbents. We find that public ownership of the incumbent positively affects these interconnect rates, and suggest that governments influence regulatory outcomes in favor of incumbents in which they are substantially invested. However, we also find that the presence of institutional features enhancing regulatory independence from the government mitigates this effect. In order to study regulatory independence, we introduce a new cross-country time-series database—the European Union Regulatory Institutions (EURI) Database. This database describes the development of institutions bearing on regulatory independence and quality in telecommunications in the 15 founding EU member states from 1997 to 2003

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Authors and Affiliations

  1. CRA International, Orion House, 5 Upper St Martin’s Lane, London, WC2H 9EA, United Kingdom

    Geoff Edwards

  2. Department of Economics, London Business School, Regent’s Park, London, NW1 4SA, United Kingdom

    Leonard Waverman

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  1. Geoff Edwards
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  2. Leonard Waverman
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Correspondence to Geoff Edwards.

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*We thank Laurent Pipitone for superb research assistance. Geoff Edwards thanks the Sasakawa Foundation and the Institute of Management, Innovation and Organization at the Haas School of Business for generous financial assistance, and London Business School for non-financial support. Leonard Waverman thanks the Global Communications Consortium for support

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Edwards, G., Waverman, L. The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes. J Regul Econ 29, 23–67 (2006). https://doi.org/10.1007/s11149-005-5125-x

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