IDEAS home Printed from https://ideas.repec.org/p/zbw/aluivr/118r.html

Regulatory agencies and regulatory risk

Author

Listed:
  • Knieps, Günter
  • Weiß, Hans-Jörg

Abstract

The aim of this paper is to show that regulatory risk is due to the discretionary behaviour of regulatory agencies, caused by a too extensive regulatory mandate provided by the legislator. The normative point of reference and a behavioural model of regulatory agencies based on the positive theory of regulation are presented. Regulatory risk with regard to the future behaviour of regulatory agencies is modelled as the consequence of the ex ante uncertainty about the relative influence of interest groups in the regulatory process. The problem of regulatory risk is analysed separately in competitive network areas and in non-competitive network areas. For both cases a specific measure of regulatory risk is proposed. But measurement and compensation are different issues. The im-possibility of compensating for regulatory risk is demonstrated. Finally, the disaggregated regulatory mandate is presented as an institutional reform approach.

Suggested Citation

  • Knieps, Günter & Weiß, Hans-Jörg, 2008. "Regulatory agencies and regulatory risk," Discussion Papers 118 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    • Handle: RePEc:zbw:aluivr:118r
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/47438/1/663375231.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Knieps, Günter, 2005. "Telecommunications markets in the stranglehold of EU regulation: on the need for a disaggregated regulatory contract," Discussion Papers 109 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    2. Blankart, Charles B. & Knieps, Günter & Zenhäusern, Patrick, 2007. "Regulation of new markets in telecommunications? Market dynamics and shrinking monopolistic bottlenecks," Discussion Papers 112 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    3. Stewart C. Myers, 1972. "The Application of Finance Theory to Public Utility Rate Cases," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 58-97, Spring.
    4. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    5. repec:bla:kyklos:v:50:y:1997:i:3:p:325-39 is not listed on IDEAS
    6. Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(2), pages 163-178.
    7. G. Knieps, 2005. "Telecommunications Markets in the Stranglehold of EU Regulation: On the need for a disaggregated regulatory contract," Competition and Regulation in Network Industries, Intersentia, vol. 6(2), pages 75-94, June.
    8. Chang, Mo Ahn & Thompson, Howard E, 1989. "An Analysis of Some Aspects of Regulatory Risk and the Required Rate of Return for Public Utilities," Journal of Regulatory Economics, Springer, vol. 1(3), pages 241-257, September.
    9. Weingast, Barry R & Moran, Mark J, 1983. "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 765-800, October.
    10. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    11. David Besanko & Daniel F. Spulber, 1992. "Sequential-Equilibrium Investment by Regulated Firms," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 153-170, Summer.
    12. Spulber, Daniel F & Besanko, David, 1992. "Delegation, Commitment, and the Regulatory Mandate," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(1), pages 126-154, March.
    13. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, December.
    14. Roger Buckland & Patricia Fraser, 2001. "Political and Regulatory Risk in Water Utilities: Beta Sensitivity in the United Kingdom," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(7‐8), pages 877-904, September.
    15. Gaggero, Alberto A., 2007. "Regulatory risk in the utilities industry: An empirical study of the English-speaking countries," Utilities Policy, Elsevier, vol. 15(3), pages 191-205, September.
    16. Roger Buckland & Patricia Fraser, 2001. "Political and Regulatory Risk in Water Utilities: Beta Sensitivity in the United Kingdom," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(7&8), pages 877-904.
    17. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    18. Stone, Bernell K, 1973. "A General Class of Three-Parameter Risk Measures," Journal of Finance, American Finance Association, vol. 28(3), pages 675-685, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. M. Maegli & C. Jaag & M. Finger, 2010. "Regulatory Governance Costs in Network Industries: Observations in Postal Regulation," Competition and Regulation in Network Industries, Intersentia, vol. 11(2), pages 207-238, June.
    2. Maegli, Martin & Jaag, Christian, 2009. "Regulatory Governance Costs in Network Industries: Implicatins for postal Regulation," MPRA Paper 15309, University Library of Munich, Germany.
    3. Knieps, Günter, 2014. "Competition and third party access in railroads," Discussion Papers 150, University of Freiburg, Institute for Transport Economics and Regional Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Knieps, Günter & Weiß, Hans-Jörg, 2007. "Reduction of regulatory risk: a network economic approach," Discussion Papers 117, University of Freiburg, Institute for Transport Economics and Regional Policy.
    2. Lehr, William & Sicker, Douglas, 2017. "Communications Act 2021," 28th European Regional ITS Conference, Passau 2017 169478, International Telecommunications Society (ITS).
    3. Ando, Amy, 1998. "Delay on the Path to the Endangered Species List: Do Costs and Benefits Matter," RFF Working Paper Series dp-97-43-rev, Resources for the Future.
    4. Antonio Estache & Liam Wren-Lewis, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," Working Papers ECARES ECARES 2010-033, ULB -- Universite Libre de Bruxelles.
    5. Birke, Franziska, 2007. "Universaldienstregulierung in der Telekommunikation heute: Herausforderungen, Chancen und Risiken ; ein historischer Ansatz," Discussion Papers 114, University of Freiburg, Institute for Transport Economics and Regional Policy.
    6. Brian Meehan & Bruce Benson, 2015. "The occupations of regulators influence occupational regulation: evidence from the US private security industry," Public Choice, Springer, vol. 162(1), pages 97-117, January.
    7. Antonio Estache & Liam Wren-Lewis, 2011. "Anti-Corruption Policy in Theories of Sector Regulation," Chapters, in: Susan Rose-Ackerman & Tina Søreide (ed.), International Handbook on the Economics of Corruption, Volume Two, chapter 9, Edward Elgar Publishing.
    8. repec:isu:genstf:2000010108000013664 is not listed on IDEAS
    9. J.A. den Hertog, 2010. "Review of economic theories of regulation," Working Papers 10-18, Utrecht School of Economics.
    10. Carlo Cambini & Yossi Spiegel, 2016. "Investment and Capital Structure of Partially Private Regulated Firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 487-515, April.
    11. Knieps, Günter, 2012. "Competition and the railroads: A European perspective," Discussion Papers 142, University of Freiburg, Institute for Transport Economics and Regional Policy.
    12. William C. Mitchell, 1990. "Interest Groups: Economic Perspectives and Contributions," Journal of Theoretical Politics, , vol. 2(1), pages 85-108, January.
    13. Knieps, Günter & Zenhäusern, Patrick, 2013. "Regulatory fallacies in global telecommunications: The case of international mobile roaming," Discussion Papers 144, University of Freiburg, Institute for Transport Economics and Regional Policy.
    14. James W. Hughes & Michael J. Moore & Edward A. Snyder, 2002. ""Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare," NBER Working Papers 9229, National Bureau of Economic Research, Inc.
    15. Rocco Ciciretti & Simone Meraglia & Gustavo Piga, 2011. "Capture, Politics and Antitrust Effectiveness," CEIS Research Paper 208, Tor Vergata University, CEIS, revised 05 Apr 2013.
    16. Moszoro, Marian W. & Spiller, Pablo T., 2014. "Third-Party Opportunism and the Theory of Public Contracts: Operationalization and Applications," MPRA Paper 101592, University Library of Munich, Germany.
    17. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    18. repec:spo:wpmain:info:hdl:2441/8527 is not listed on IDEAS
    19. Niels J. Philipsen, 2010. "Regulation Of Liberal Professions And Competition Policy: Developments In The Eu And China," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 203-231.
    20. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    21. Brian C. Albrecht & Joshua R. Hendrickson & Alexander William Salter, 2022. "Evolution, uncertainty, and the asymptotic efficiency of policy," Public Choice, Springer, vol. 192(1), pages 169-188, July.
    22. Howell, Bronwyn, 2009. "Politics and the Pursuit of Efficiency in New Zealand's Telecommunications Sector 1987-2008," Working Paper Series 19134, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:aluivr:118r. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/wffrede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.