Independent regulators: theory, evidence and reform proposals

The purpose of this paper is to discuss literature and empirical evidence on regulatory independence especially in telecommunications and to suggest reforms of this institution.

The paper comprises a survey of the literature plus new empirical evidence on de facto independence.

The study finds that independence has a positive and significant, but modest, impact on network penetration, once de facto issues and endogeneity are taken into account.

De facto independence can only be superficially approached with quantitative methods and the instruments used to correct for endogeneity are far from perfect.

Regulatory agencies may find ways to improve their effectiveness.

The paper provides ideas on how to solve the dilemma between expertise and accountability in the particular field of telecommunications regulation.

The paper provides data about the vulnerability of independent regulation in telecommunications in Latin America until 2010.