Does Regulatory Independence Translate into a Higher Degree of Liberalization? - Evidence from EU Energy Regulators

Henrik Lindemann

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Independent regulatory authorities are a basic prerequisite for a successful liberalization process. However, contrary to what is expected, both graphical analyses and OLS regressions for a small sample of electricity and gas regulators operating in 16 European countries reveal a negative relationship between the authorities' formal autonomy from politicians and the scope of market reforms. These findings might suffer from endogeneity, though, so we draw on political scientists' explanations for diverging independence levels to construct appropriate instruments. The 2SLS-IV results then confirm conventional wisdom: the higher the degree of regulatory autonomy, the higher the level of liberalization.

Keywords: Independent Regulatory Authorities; Energy Market Liberalization; Formal Independence (search for similar items in EconPapers)
JEL-codes: L50 L94 L95 L98 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-01
New Economics Papers: this item is included in nep-ene, nep-eur and nep-reg
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