presentation als 25 feb

8/12/2019 Presentation ALS 25 Feb

1/17

Explaining institutional arrangements in

telecommunications regulation:an empirical analysis

Applied Lunch Seminar. 10.III.2004

Ral Castro


2/17

...a context to motivate a research

Banking

Agribusiness

Energy

Aviation

Pharmaceuticals
http://www.legemiddelverket.no/default.htmhttps://owa.hsa.ie/http://www.hse.gov.uk/index.htmhttp://localhost/var/www/apps/conversion/tmp/scratch_7/http://localhost/var/www/apps/conversion/tmp/scratch_7/http://www.nibsc.ac.uk/http://www.ffiec.gov/default.htmhttp://localhost/var/www/apps/conversion/tmp/scratch_7/http://www.kfda.go.kr/http://localhost/var/www/apps/conversion/tmp/scratch_7/http://www.eea.eu.int/


3/17

...a context to motivate a research

Telecoms: telecoms agencies (plus ministries) and antitrust agencies

In early 90s, among Canada, France, Germany, Japan, Mexico, New Zealand,

Spain, UK and US, only the UK and the US did not have a Ministry office as

telecom regulator. By 1998 it changed...

US: (a) before 82, leading FCC; (b) after AT&T, leading Antitrust Division; after 96 Telecom Act, the FCC strikes back...

New Zealand and Australia: leading antitrust agencies

Italy: agency with broad jurisdiction over telecom, internet and broadcasting

The UK : OFTEL becomes a (telecom) antitrust agency

EU: (recent) movement towards the British model


4/17

Concluding remarks Key drivers of institutional design (jurisdiction arrangements) from Castro (2001):

Government perception of Antitrust Agencys (AA) transparencyadvantages vs.

Industry-Specific Agencys (ISA) expertiseadvantages.

Safeguardsagainst capture and competence weakness

Empirical analysis:

Institutional arrangements in key issues are consistent with the competence-

transparency interpretationMore jurisdiction to the AA(reduced AAs competence weakness) when:

(i) faster AA procedures,

(ii) market complexity is competition-based,

(iii) Government can enforced ad-hoc rules on incumbent and

(iv) larger country corruption perception

More jurisdiction to the ISA(reduced ISAs transparency weakness) when

(i) legal and procedure safeguards against capture are in place,

(ii) when the AA discretion is excessive.


5/17

Why all ocating more regulatory jur isdiction to an Antitr ust Agency (AA) in telecoms?:

I SA vs. AA: reasons to choose

Transparency!

Revolving door phenomenon[Eckert (1981), Laffont and Martimort (1998), Heyes (1999)]

Easier monitoringits decision due to: (i) more homogeneousset of tasks [Dewatripont,

Jewitt, and Tirole (1999) Cook (2001)], (ii) largerjurisprudence, (iii) existing know-how is more

available to newcomers (iv) easier-to-be "caught" instruments [Tiller (1998)]

Policy Consistency [Laffot and Tirole (2000)]

Why allocating more regulatory jur isdiction to an I ndustry-Specif ic Agency (ISA) i n

telecoms?: Competence / expertise!

Ongoing specific and prescriptive powers to face: (i) technology complexity, (ii)

network specificities, (iii) dominant position in network access [Cave (1997) and Bergman et al

(1999)]

Better equipped to face information asymmetries [Van den Bergh and Camesasca (2002)]

Organizational balance


6/17

Alternative explanations in the literature

Importance of monopolistic (network) bottlenecks, interconnection

and unbundlingissues and asymmetricregulation:

Knieps (1997)

Shelanski (2002)

Credibility: signal to market players of credible commitment with a

certain policy lineLevy and Spiller (1996)

Gilardi (2002)

Stern and Trillas (2002)

...dr ive more

jur isdiction to the ISA

...dr ive morejur isdiction to the AA

Regulatory intensity

Cave (1997)

Bergman et al (1999)

Importance of Universal Service Obligations(USOs)

Green and Teece (1997)

Scott (1998),

Laffont and Tirole (2000)


7/17

Empirical Analysis. Basics

Data: 26 countries of the OECD area. Year: 1998 (97-99)*.

...composite index(factor analysis) *

Explained Variables: [New measures of] Institutional arrangementsamong the ISA, Ministry and AA in 5 regulatory issues

Pricing

Licensing

Interconnection

Telecom-specific merger review Coordination: involvement of AA in ISAs decision making?

and their consolidation in a...

Units Of Measure: Scale values of institutional arrangements increase with

the ISA involvement. Medium value correspond to a leading Ministry.


8/17

Empirical Analysis. Basics

Explanatory Variables:Regression analysis on several proxies of

1. competence and transparency conditions associated to the

AA and the ISA.

2. Control for alternative explanations: Credibility, importance

of social goals and regulatory intensity. *

Econometric Tools:

1. Ordered logit was used to analyze the (ordinal/discrete)variables;

2. OLSwas used to analyze the composite index.

3. Additional regressions with robust errors


9/17

PricingOrdered logit

(-)

(-)

(+)

(+)

(+)

Empirical Analysis. Results

Competition development:

95-97 mkt shr growth

Competence

variables

Transparency

variables

Antitrust speed

Enforc. Procedures:penaltiesdirectly enforced?

(Per se) unfair competitionprohibition

Golden share

AA discretion to appove(otherwise) illegal mergers

Price info verifiability

Interconnection transparency:publishing requirement

Country corruption level

Public access to futureregulations

Contextvariable

AA-typevariable

ISA-typevariable

Political Constraints: # Govbranches with veto power

Control

variables

(-)

Compositeindex

OLS

(-)

(-)

(-)

(+)

(+)

(-)

(+)

(-)

LicensingOrdered logit

(-)

(-)

(-)

(+)

(+)

InterconOrdered logit

(-)

(+)

(+)

(-)

CoordOrdered logit

(-)

(+)

(-)

Telecommergerreview

Ordered logit

(-)

(+)

Importance of USOs: formallystructured USOs?

Regulatory intensity

(-)

(+)*

(-)

(-)

(-)

(-)

(+)

(+)

(-)

(+)

Composite indexw/ control variables

OLS

(+)*

*Statistically not significant(dropped) statistically not significant with robust errors

*

* *


10/17

Policy implications

Competition development drive regulatory reforms...

...in the jurisdiction allocation and not only in the instrument mix

(European) institutional convergence in regulation among countries

should assign enough national discretion...

...institutions should evolve according to their institutional

endowment, market conditions.

Institutional convergence (ISAstowards an AA-type), require Foreclosure

(complete substitution) to be discussed...

...if CMT has to be a telecom-TDC(SDC), why separate

institutions?


11/17

1 2 3 4 5 6 7 8 9

Pricing Licensing Competition Interconnection CoordinationComposite

Index 1

Composite

Index 2

Composite

Index 3

Composite

Index 4

(Ordered Logit) (Ordered Logit) (Ordered Logit) (Ordered Logit) (Ordered Logit) OLS OLS OLS OLS

Competence

Variables

-0.157 -0.355 -0.031 -0.034 -0.031 -0.030(0.092) (0,02) (0,001) (0,000) (0,002) (0,002)

-3.328 -3.147 -0.359 -0.463 -0.360 -0.336(0,025) (0.067) (0.037) (0,006) (0,045) (0,006)

-1.718 -1.357 -6.329 -0.499 -0.471 -0.507 -0.507

(0.046) (0,046) (0,044) (0.000) (0.000) (0.000) (0.000)

-3.172 -5.867 -2.284 -0.835 -0.980 -0.833 -0.853(0,033) (0,01) (0,032) (0.002) (0,000) (0,003) (0,003)

Transparency

Variables

2.701 1.898 9.737 0.569 0.427 0.574 0.537(0,073) (0,068) (0,019) (0,001) (0,007) (0,002) (0,005)

1.135 1.373 0.778 0.214 0.208 0.212 0.197(0,06) (0,086) (0,033) (0.015) (0,008) (0,021) (0,04)

3.095 2.217

(0,036) (0,033)

-4.610 -0.347 -0.353 -0.349 -0.371(0,055) (0.006) (0.002) (0.008) (0.008)

0.072 0.005 0.007 0.005 0.005(0,025) (0.082) (0.013) (0.106) (0.085)

Control Variables

-1.639(0.033)

0.027

(0.832)

0.234(0.599)

Pr (y < cut1) 0.077 0.077 0.500 0.190 0.333

Pr (cut1 < y < cut2) 0.423 0.500 0.270 0.270 0.333

Pr (cut2 < y) 0.500 0.420 0.230 0.540 0.333

23.11 27.69 11.8 15.81 30.61

Log Likelihood 12.046 -9.758 -21.1 -18.187 -7.77

Pseudo R2

0.489 0.587 0.2186 0.303 0.663

Adjusted R2

0.816 0.86 0.79 0.804

Note: p-values in parenthesis

unfcomp

incentin

aaprison

regburdn

interctr

goldnshr

brib97

mrgexbf

infpreg

fpra

usomech

polcon02

Empirical Analysis. Results

*


12/17

Empirical Analysis. Results with robust errors1 2 3 4 5 6 7 8 9

Pricing Licensing Competit ion Interconnection Coord inationComposite

Index 1

Composite

Index 1

Composite

Index 1

Composite

Index 1

(Orde re d Log it ) (Ordered Log it ) (Ordered Logi t) (Ordered Logi t) (Orde re d Log it ) OLS OLS OLS OLS

Competence

Variables

-0.157 -0.355 -0.031 -0.033 -0.030 -0.030(0.140) (0,006) (0,003) (0,000) (0,004) (0,006)

-3.327 -3.147 -0.359 -0.463 -0.360 -0.330(0,01) (0.093) (0.013) (0.020) (0.016) (0.022)

-1.718 -1.357 -6.329 -0.499 -0.471 -0.506 -0.506(0.036) (0,13) (0,041) (0.000) (0.000) (0.000) (0.000)

-3.172 -5.867 -2.284 -0.835 -0.980 -0.833 -0.833(0,014) (0,039) (0,043) (0.000) (0.000) (0.000) (0.000)

Transparency

Variables

2.701 1.898 9.737 0.569 0.427 0.574 0.537(0,11) (0,103) (0,003) (0,003) (0,0021) (0,004) (0,027)

1.135 1.373 0.778 0.214 0.208 0.212 0.196(0,003) (0,026) (0,004) (0.021) (0.006) (0.023) (0.064)

3.095 2.217(0,053) (0,025)

-4.610 -0.347 -0.353 -0.349 -0.371(0,009) (0.006) (0.001) (0.010) (0.007)

0.072 0.005 0.007 0.005 0.005(0,02) (0.037) (0.008) (0.052) (0.052)

Control

Variables

-1.639

(0.019)

-0.274(0.819)

-0.234

(0.630)

12.17 12.22 8.94 10.56 9.21

Log Likelihood 12.046 -9.758 -21.1 -18.187 -7.77

Pseudo R2

0.489 0.587 0.2186 0.303 0.663

Adjusted R2

0.88 0.92 0.89 0.89

Note: p-values in parenthesis

incentin

unfcomp

aaprison

goldnshr

mrgexbf

infpreg

interctr

regburdn

brib97

fpra

polcon02

usomech

*


13/17

Endogeneity

Per seprohibition of unfair competition

(Discretionary) exceptions in merger review

AAsdiscretion to enforce penalties

Reverse causation: Do institutionalarrangements determine these variables?

...no, they dont seem to

overall antitrust framework

overall institutional issues

It is previous to the

analysis date (1998)

forward planning of regulatory activities

Country corruption perception

95-97 market entry speed of telecom

newcomers

transparency conditions for final and

interconnection prices

telecommunications

legislation

Back


14/17

Basics of the Model

Back

AA enforcement

effectiveness

AA enforcement

transparency

ISA enforcement

effectiveness

ISA enforcement

transparency

ISA (or AA)

relative advantage

on E. effectiveness

AA (or ISA)

relative advantage

on E. transparency

Institutional preference:

Assigment of institutional power

and decision involvement

+/-+/-


15/17

Composite Indexes of institutional arrangements

Australia 1.000 Australia -1.610

New Zealand 1.217 New Zealand -1.286Denmark 1.593 Finland -0.788

Finland 1.598 Belgium -0.708

Belgium 1.610 Denmark -0.619

Turkey 1.763 Japan -0.500

Italy 1.775 Turkey -0.460

Switzerland 1.799 Italy -0.381

Japan 1.847 Switzerland -0.375

Korea 2.000 Hungary -0.289

Hungary 2.032 Korea -0.252Netherlands 2.033 Netherlands -0.140

Mexico 2.185 France -0.008

Portugal 2.188 United Kingdom 0.068

France 2.205 Portugal 0.081

United Kingdom 2.270 Mexico 0.108

Greece 2.338 Greece 0.355

Norway 2.338 Norway 0.355

Austria 2.373 Austria 0.441

Czech republic 2.578 Czech republic 0.536Germany 2.695 Germany 0.610

Ireland 2.763 Sweden 0.857

Spain 2.763 Ireland 0.897

Sweden 2.847 Spain 0.897

United States 3.000 United States 1.105

Canada 3.000 Canada 1.105

Composite index of institutional

arrangements (weighted index)

Composite index of institutional

arrangements (factor scores)

Back


16/17

Institutional arrangements in telecom regulation

Back

Pricing(mean = 2.42 / = 0.64)

Licensing(mean = 2.35 / = 0.63)

Competion Policy(mean = 1.73 /= 0.83)

Interconnection(mean = 2.35 / = 0.78)

Institutional Coordination(mean = 1.89 / = 0.82)

United States ISA with full responsibility1,2 ISA with full responsibility1,2 ISA with leading responsibility1,5,6, 11 ISA with exclusive powers1,2,5, 6,11 Unclear or weak coordination2,5,6, 11,32,33

Japan Ministry decides + ISA advices1,35

Ministry decides (ISA advises)1,2

Ministry with large responsibility1,2

Ministry with exclusive powers1,2,35

Formal advocacy role + guidelines6

Germany ISA with full responsibility1,2,37

ISA with full responsibility1,2,3

ISA with leading responsibility1,5,7

ISA with exclusive powers1,2,7

Formal advocacy role + guidelines2,6,37

France Ministry decides + ISA advices1,2 Ministry issues + ISA oversees1,2,3Under concurrence, ISA has leading role for

some issues as a specific enforcer 1,2,7ISA with exclusive powers1,2,7 Formal but non binding advocacy role2,6

Italy ISA with full responsibility1,2,21 Ministry issues + ISA oversees1,2,3, 21 AA with full responsibility1,2,7 Concurrence ISA/AA6,20,21 Formal but non binding advocacy role2,6,20, 21

United Kingdom ISA with full responsibility1,2Ministry issues it. ISA+Ministry oversees

it1,2,33, 34

Under concurrence, ISA has leading role for

some issues as a specific enforcer1,2,7 ISA with exclusive powers

1,2 Formal and binding advocacy role2,6, 32, 33,34

Canada ISA with full responsibility1,2 ISA with full responsibility1,2,4 Under concurrence, ISA has leading role forsome issues as a specific enforcer 1,2,8

ISA with exclusive powers1,2 informal advocacy role2,6

Australia AA with full responsibility1,2

Ministry issues + AA oversees1,2

AA with full responsibility1,2,6

AA with exclusive powers1,2,6, 21,23

Formal and binding advocacy role2,6,23,32

Austria ISA with full responsibility1,2,9 ISA with full responsibility1,2,9 AA with full responsibility9,10 ISA with exclusive powers1,2,9 Formal but non binding advocacy role

Belgium Ministry decides + ISA advices1,2

Ministry issues + ISA oversees1,2

AA with full responsibility1,6

Concurrent jurisdiction of Ministry/ISA1,2,24 Formal and binding advocacy role

Denmark Concurrence of ISA/AA1,2

ISA with full responsibility1,2

AA with full responsibility1,2,6

Concurrent jurisdiction: ISA and AA, with

significant role of the AA6,25Formal and binding advocacy role

2,6

Finland AA with full responsibility1,2



ISA with exclusive powers1,2 Formal and binding advocacy role

Greece ISA with full responsibility1,2 Ministry issues + ISA oversees1,2 AA with full responsibility1,2 ISA with exclusive powers1,2 Unclear or weak coordination

Ireland ISA with full responsibility1,2 ISA with full responsibility1,2Under concurrence, ISA has leading role for

some issues as a specific enforcer 1,2ISA with exclusive powers1,2 Unclear or weak coordination26,38

Mexico ISA with full responsibility1,2,27



ISA with exclusive powers1,2,27

Formal but non binding advocacy role2,27

Netherlands ISA with full responsibility1,2 Ministry issues + ISA oversees1,2 AA with full responsibility1,2 ISA with exclusive powers1,2,28 Formal and binding advocacy role2,6

New Zealand Concurrence of ISA/AA1,2

ISA issues it / AA oversees it1,2,36


AA with exclusive powers1,2

Formal and binding advocacy role2,6

Norway ISA with full responsibility1,2 Ministry issues + ISA oversees1,2AA has the leading role under institutional

concurrence1,2 ISA with exclusive powers

1,2,29 Unclear or weak coordination6

Portugal Concurrence of ISA/AA1,2

ISA issues it / ISA oversees it1,2

Ministry with large responsibility1,2

Concurrent jurisdiction: Ministry/ISA/AA1,2

Formal and binding advocacy role2,6

Spain ISA with full responsibility1,2,12 Ministry issues + ISA oversees1,2,3Under concurrence, ISA has leading role for

some issues as a specific enforcer 1,2ISA with exclusive powers1,2,7 Informal advocacy role2

SwedenISA with full responsibility

1,2

ISA with full responsibility

1,2

ISA with leading responsibility

6

ISA with exclusive powers

1,2

Formal but non binding advocacy role

2,6

Switzerland Ministry decides + ISA advices1,2 ISA with full responsibility1,2 AA with full responsibility1,2,15 Concurrent jurisdiction: Ministry and ISA1,2,15, 22 Formal and binding advocacy role2,6,15, 37

Turkey Ministry decides + ISA advices1,2 Ministry issues + ISA oversees1,2,19 AA with full responsibility1,2,18Concurrent jurisdiction: Ministry, ISA and AA 1,2,

22 Formal but non binding advocacy role2,6

Czech Republic Ministry decides + ISA advices1,2


ISA with leading responsibility1,2,16

Concurrent jurisdiction: Ministry and ISA1,2,22

informal advocacy role16

Hungary Ministry decides + ISA advices1,2,16

Ministry issues + ISA oversees1,2,16

ISA with leading responsibility1,2,16, 17

Concurrence Ministry/ISA/AA30

Formal but non binding advocacy role2,6,16

Korea Ministry decides + ISA advices1,2 Ministry issues + ISA oversees1,2 Ministry with large responsibility1,2 Concurrent jurisdiction of Ministry and ISA1,2,31 Formal but non binding advocacy role2,6

1OECD International Regulation Database

20Italian Government (1997): Presidential Decree no. 318/97

18Turkish Competition Authority: "About the Turkish Competition Authority". In http://www.rekabet.gov.tr/

37Knieps, Gnter (1997): "Phasing out Sector-Specific Regulation in Competitive Telecommunications". KYKLOS. 50(3), p. 325-339

19Ersoy, E. (2000): New Turk telecoms board seeks UMTS licensing power". Total Telecom . 17 August 2000

38Such lack of coordination changed dramatically in 2002 with the signature of the Co-Operation Agreement betwee the Competition Authority and the Commission for

Communications Regulation December 2002

16Borucki, W., Hruby, Z. S chmideg, I., Pogorel, G. (1999): "EU Telecom Regulation in Accession Countries".

Communications & Strategies. 34, p. 25335

Omura, Tatsuya (19997): "Japan's stumbling policy for competition in the telecommunications industry". Telecommunications Policy. 21(2), p. 127-141.17

Hungarian Communication Authority (2000): "Hungarian Telecommunications Regulatory Environment and A uthority".

Blue Paper36

Crandall, Robert (1998): "New Zealand spectrum policy: a model for the United States?". Journal of Law and Economics. 41, p. 821-840

14Ley General de Telecomunicaciones, 11/1998.

33Bickenbach, Frank, Kumkar, Lars and Soltwedel, Rdiger (1999): "The New Institutional Economics of Antitrust and Regulation". Keil Working Paper. N 961

15Bler, Stefan (1998): Regulatory reform of telecommunications in Switzerland. Telecommunications Policy. 22(8). Pp. 671-

680

34Spiller, Pablo and Vogelsang, Ingo (1999): "The Institutional Foundations of Regulatory Commitment in the UK: The Case of Telecommunications".Journal of Institutional and

Theoretical Economics. 153(4): 607-629

12Ley de Liberalizacin de las Telecomunicaciones, 12/1997.

31Korea Fair Trade Commission: Exemptions and Exceptions to Competition Policy and Law in Korea

13CMT (1999): Informe Anual

32Chaves, Bruno (1999): "Incentive Structures and Dispute Resolution Devices in the Telecommunications Industry". Centre d'Analyse Thorique des Organisations et des

Marchs Working Paper. 99-03

10OECD(1999): Antitrust Report of Austria 1997-1998

29Norwegian Parliament: The Telecommunications Act of 23 June 1995. Amended latest on 25 March 1999, in force as of 30 April1999.

11Klein, Joseph (1996): "Antitrust Law as a R egulator of the Rapidly Transforming Telecommunications Market".

Communications & Strategies. 23, p. 209

30Office of Economic Competition (1999): The Competition Policy Position of the Office of Economic Competition on the K ey Issues of Telecommunications Market

Liberalisation

8CRTC (1998): Telecom Decision CRTC 98-17, 1 October 1998

27Tovar, Ramiro (1997): "Policy reform in netowrks infrastructure. The case of Mexico". Telecommunications Policy. 21(8). Pp. 721-732

9International Telecommunications Union: Regulators Profile - A ustria

28Commision of OPTA (1999): Determination of the preliminary tariffs for interconnection and special access that are to be applied by KPN Telecom B.V. from 1 July 1999 until

1July 2000. OPTA/IBT/99/8000

6OECD (1999): ''Relationship Between Regulators and Competition Authorities''. Best Practice Roundtables.

DAFFE/CLP(99)825

Danish Parliament (1998):Act on Competitive Conditions and Interconnection in the Telecommunications Sector. No. 860 of 4 December 19987Prosperetti and Cimatoribus (1998): "Andante ma non troppo: Telecommunications liberalisation Trends in Continental

Europe" Communications & Strategies. 3126

Massey, Patrick and Shortall, Tony (1999): "Competition and Regulation in Public Utility Industries". Competition Authority Discussion Paper. 7

4CRTC (1998): Telecom Decision CRTC 98-17, 1 October 1998

23OECD King, S. and Maddock, R. (1999): "Light-handed regulation of access in Australia: negotiation with arbitration" Information Economics and Policy11(1999), p 1-22

5Shelanski (2002): "From sector-specific regulation to antitrust law for US telecommunications: the prospects for transition".

Telecommunications Policy. 26(2002) 335-35524

Belgian Institute for Postal Services and Telecommunication (1999):Annual Report 1999

2OECD (2000): ''Telecommunications regulations: Institutional structures and responsibilities''. Mimeo

21Bianchi and Richeri (1999): "Pecularities and fist steps of the Communications Authority in Italy". Communications & Strategies, 34, p. 231

3Prosperett i and Cimatoribus (1998): Andante ma non troppo: Telecommunications liberalisation Trends in Continental

Europe" Communications & Strategies. 3122

OECD (1999): OECD Communciations Outlook 1999


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Composite Indexes of institutional arrangements

Back

N Minimum Maximum Mean

Standard

Deviation

Competence Variables

unfcomp:prohibition of unfair

competition1

26 0 1.00 0.54 0.51

incentin: % of change in int.

market share 97-951

26 0 31.60 6.96 8.98

aapr ison: AA procedure for

imprisonment. speed proxy1

25 0 2.00 0.60 0.87

goldnshr : golden share to

influence the incumbent1

26 0 1.00 0.31 0.47

Speed of antitrust enforcement

The faster antitrust procedures the the involvement of the AA -AAPRISON,

UNFCOMP

Special mechanism of business intervention

Golden shares to influence the incumbent operation reduces the

involvement of the ISA - GOLDSHR

Competitive environmentThe larger the market share gained by newcommers from the incumbent

the larger the involvement of the AA - INCENTIN

Enfocement Competence(RISAand RAAin the model in Chapter 1)

Transparency Variables

mrgexbf : merger exception based

on business failure1

24 0 1.00 0.46 0.51

infpreg:sources of information for

price regulation1

26 1 5.00 2.73 1.12

interctr :mandatory requirement to

publish interconnection prices1

26 0 1.00 0.73 0.45

br ib97: Corruption measures wb-

wef2

21 3 6.62 5.51 1.06

fpra:Forward planning of

Regulatory activities3

26 0 100.00 40.50 31.34

1OECD International Regulation Database

3OECD (1998): Indicators Of Regulatory Capacities In Oecd Countries: Preliminary Analysis. Mimeo

2Johnson, S., Kaufmann, D. and Zoido-Lobatn (1998) Regulatory Discretion and the Unofficial Economy.

American Economic Review, 88(2). pp. 387-392.

HypothesisExpected effect on ISA

involvement (inst. arrangement)Variable

Verifiability of information for regulation

The more verifiable information for final price regulation the larger the

involvement of the ISA + INFPRECPublishing requirement of interconnection prices increases the involvement

of the ISA + INTERCTRThe larger public access to future regulation the larger the involvement of

the ISA + FPRA

Enforcement opacity

AA's discretion to apply merger review exceptions based on bankruptcy

increases the involvement of the ISA+

MRGEXBF

The larger business perception that irregular "side-contracts" are common

the larger the involvement of the AA-

BRIB97

Enfocement transparency(TISAand TAAin the model in Chapter 1)

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