The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation

Posted: 12 May 2000

See all articles by Brian Levy

Brian Levy

World Bank

Pablo T. Spiller

University of California, Berkeley - Business & Public Policy Group

Abstract

In this paper we look, comparatively, at the problem of utilities regulation through the lens of transcation cost economics to analyze the determinants of performance of privatized utilities in different political and social circumstances. We explore how political institutions interact with regulatory processes and economic conditions in exacerbating or ameliorating the economic performance of the sector. We find that performance can be satisfactory with a wide range of regulatory procedures, insofar as three complementary mechanisms restraining arbitrary administrative action are in place: a) substantive restraints on the discretion of the regulator; b) formal or informal constaints on changing the regulatory system; and c) institutions that enforce the above formal constraints. We find that regulatory credibility can be developed in not very propitious environments, that without such commitment long-term investment will not take place, that achieving such commitment may require inflexible regulatory regimes, that in some cases public ownership of utilities is the default mode of organization, and furthermore, that it may be the only feasible alternative.

JEL Classification: K23

Suggested Citation

Levy, Brian and Spiller, Pablo T., The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation. JOURNAL OF LAW, ECONOMICS, AND ORGANIZATION, Vol 10, No 2, 1994. Available at SSRN: https://ssrn.com/abstract=5409

Brian Levy

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Pablo T. Spiller (Contact Author)

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-642-1502 (Phone)
510-642-2826 (Fax)

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