Delegation in the Regulatory State
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Delegation in the Regulatory State

Independent Regulatory Agencies in Western Europe

Fabrizio Gilardi

During the past 25 years, independent regulatory agencies have become widespread institutions for regulatory governance. This book studies how they have diffused across Europe and compares their formal independence in 17 countries and seven sectors. Through a series of quantitative analyses, it finds that governments tend to be more prone to delegate powers to independent regulators when they need to increase the credibility of their regulatory commitments and when they attempt to tie the hands of their successors. The institutional context also matters: political institutions that make policy change more difficult are functional equivalents of delegation. In addition to these factors, emulation has driven the diffusion of independent regulators, which have become socially valued institutions that help policymakers legitimize their actions, and may even have become taken for granted as the appropriate way to organize regulatory policies.
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Chapter 4: The Formal Independence of Regulators: Empirical Analysis

Fabrizio Gilardi


INTRODUCTION Independent regulatory agencies are the cornerstones of the regulatory state that has come into being throughout Europe during the last 15 years. In Chapter 3 we saw that delegation to independent regulators is in many ways puzzling: normally we would not expect political principals to grant significant powers to administrative agents and then make them explicitly independent, at least in part, of political control. Therefore, delegation to IRAs cannot be explained simply by the need for specialization and expertise: these factors certainly matter for the creation of specialized agents, but not for making them independent. Therefore, three complementary explanations were developed. The first argues that granting formal independence to regulators is a way for policy makers to increase the credibility of their policy commitments, which is a valuable asset especially when one of the main goals of regulation is to maintain an investor-friendly environment. The second explanation is also linked to the inherent instability of policies, but focuses on the dangers posed by the democratic process for the survival of the policy choices of current policy makers. Since majorities come and go, future policy makers with different preferences are in a position to undo the achievements of current policy makers. Delegation to independent authorities, from this perspective, is a means for current policy makers to increase the durability of their choices by protecting them from political influence, both present and future. The third explanation stresses the institutional context: in the presence of many veto players, policies...

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