The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes: A Study of Interconnect Rates in EU Telecommunications

51 Pages Posted: 16 Feb 2005  

Geoff A. Edwards

affiliation not provided to SSRN

Leonard Waverman

London Business School

Date Written: January 2005

Abstract

We examine the effects of public ownership and regulatory agency independence on regulatory outcomes in EU telecommunications. We present evidence of political influence over regulatory outcomes, and demonstrate the importance of regulatory independence in ensuring unbiased regulatory policy. Specifically, we study regulated interconnect rates paid by entrant firms to incumbent firms. We find that public ownership of the incumbent positively affects these interconnect rates, suggesting an ability of governments to influence regulatory outcomes in favor of incumbents in which they are substantially invested. But 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. Beyond the current research, we expect this database will prove useful in future studies of the effects of the institutional environment of regulation on industry structure and performance.

Keywords: Regulatory outcomes, regulatory policy, public ownership, government ownership, privatization, regulatory independence, European Union, telecommunications, interconnect rates, National Regulatory Authorities (NRAs), European Union Regulatory Institutions (EURI) Database

JEL Classification: H11, K23, L43, L96, O52, O57

Suggested Citation

Edwards, Geoff A. and Waverman, Leonard, The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes: A Study of Interconnect Rates in EU Telecommunications (January 2005). Available at SSRN: https://ssrn.com/abstract=588722 or http://dx.doi.org/10.2139/ssrn.588722

Geoff A. Edwards (Contact Author)

affiliation not provided to SSRN

No Address Available

Leonard Waverman

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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