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Economic Regulation: Recentralisation of Power or Improved Quality of Regulation?

  • PAUL K. GORECKI

    (Economic and Social Research Institute Dublin, Trinity College Dublin.)

The October 2009 Government Statement on Economic Regulation proposes a number of sensible reforms that are likely to improve regulatory performance in energy, airports, telecommunications, postal services and transport. However, the Government Statement also proposes to reduce the independence of regulators by holding them to account through a whole series of additional mechanisms, some of which are informal and lack transparency, while at the same time instructing regulators to take into account evolving/current – possible transient – priorities. There are good reasons for preserving and strengthening rather than undermining regulatory independence. For example, it facilitates investment in long-lived assets with a large element of sunk or irrecoverable investment, a common characteristic of network sectors. The Government Statement’s unexplained move to reduce regulators’ independence finds no support in either the government commissioned background report prepared by the Economic Intelligence Unit, Review of the Regulatory Environment in Ireland, or recent European Union legislation on energy and telecommunications regulation. Indeed, these sources are strongly in favour of regulatory independence. Two, not necessarily mutually exclusive explanations, for reducing regulatory independence are discussed: to remove an anomaly in the Irish political system; and, to assist in the delivery of social partnership. The paper concludes by arguing that some thought might be given to public consultation of the reforms in the Government Statement prior to further implementation.

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Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 42 (2011)
Issue (Month): 2 ()
Pages: 177–211

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Handle: RePEc:eso:journl:v:42:y:2011:i:2:p:177-211
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  1. Massey, Patrick, 2007. "Delayed Indefinitely: Regulatory Reform of the Irish Bus Industry," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2007(1-Spring), pages 38-61.
  2. FitzGerald, John & Keeney, Mary J. & McCarthy, Niamh & O'Malley, Eoin & Scott, Susan, 2005. "Aspects of Irish Energy Policy," Research Series, Economic and Social Research Institute (ESRI), number PRS57.
  3. Gorecki, Paul K. & Lyons, Seán & Tol, Richard S. J., 2010. "Public Policy Towards the Sale of State Assets in Troubled Times: Lessons from the Irish Experience," Papers WP356, Economic and Social Research Institute (ESRI).
  4. Niamh Hardiman, 2006. "Politics and Social Partnership - Flexible Network Governance," The Economic and Social Review, Economic and Social Studies, vol. 37(3), pages 343–374.
  5. Lyons, Sean & FitzGerald, John & McCarthy, Niamh & Malaguzzi Valeri, Laura & Tol, Richard S. J., 2007. "Preserving Electricity Market Efficiency While Closing Ireland's Capacity Gap," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2007(3-Autumn), pages 62-82.
  6. Geoff Edwards & Leonard Waverman, 2006. "The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes," Journal of Regulatory Economics, Springer, vol. 29(1), pages 23-67, 01.
  7. Bird, Richard, 2010. "Taxation and Decentralization," World Bank - Economic Premise, The World Bank, issue 38, pages 1-5, November.
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