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Explaining institutional arrangements in
telecommunications regulation:an empirical analysis
Applied Lunch Seminar. 10.III.2004
Ral Castro
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...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/ -
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...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
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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.
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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
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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)
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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.
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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
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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
*
* *
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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?
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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
*
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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
*
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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
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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
+/-+/-
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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
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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
Ministry issues + ISA oversees1,2
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
Ministry issues + ISA oversees1,2
AA with full responsibility1,2
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 full responsibility1,2
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
Ministry issues + ISA oversees1,2
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)