Is regulatory quality related to industry performance? Evidence on telecommunications, gas and electricity in EU15

Abstract

This paper provides empirical evidence on ex ante and ex post indicators of regulatory quality and the relationship between those indicators and market performance in liberalised EU-15 network industries. We report a low level of regulatory independence and competence, a high level of cross-country variations in regulatory quality, and a prevalent absence of correlation between ex ante regulatory quality and ex post performance indicators. On the basis of these findings, we suggest that the design of national regulatory agencies (NRAs) in Europe is not optimal and may be conducive to regulatory ineffectiveness or outright regulatory failure. Nevertheless, the existence and strengthening of EU-level regulators could enable EU member states to reduce the risk of regulatory failure by encouraging coordination and adoption of best practice.Economics of Regulation, European Public Policy, Regulatory Quality, European Network Industries.