Comparative Analysis of Regulatory Governance Regimes in the Oecd

Abstract : Relying on surveys managed by the OECD among its members states since the early 2010’s, we apply textual analysis to the description of the status of regulatory agencies (RAs) in different European countries and sectors, together with characterization of their relationships with various stakeholders, and of their duties and means. Four independent dimensions seems to characterize regulatory governance regimes: the independence from the government; the level of discretion of the RA; the scope of its market monitoring capabilities; its ability to ensure transparency of the supply side. Our regulatory governance indicators exhibit significant correlations with industry evolutions and performances. Strong contrasts exist however across industries. This might reflect partly differences in terms of "maturity". Younger RAs seems characterized by more informality and an access to a poorer set of regulatory tools. However, it is not for sure that sectoral regulators are converging toward a common model, since they are operating in industries with highly contrasted economies which might result in contrasted agendas for the RA. In the e-communication sector, regulatory governance seems critical to the performance in terms of quality of service (broadband), while in the electricity industry, the main objective of the RAs seems to be the price of energy, even at the cost of the environmental quality of electricity. In the transportation industries (air and rail), the focus is on the volume/development of traffic and on the enhancement of safety. As compared to previous studies, our results differ on two main grounds. First, we point out that the degree of discretion of RA's powers matters (in addition to independence). We also highlight that RAs have to promote transparency (in addition to designing markets and setting tariffs). Over the past years in Europe, the most significant evolutions have concerned these two overlooked dimensions of regulatory governance.

---

A Social Contract Perspective on Public Administration

Abstract : This paper explains how to use the calculus of consent framework to think more rigorously about self-governance, and applies this framework to the issue of evaluating federal regulatory agencies. Robust political economy is the idea that institutions should be designed to work well even under weak assumptions about decision-makers’ knowledge and benevolence. I show how the calculus of consent can be used to analyze both incentives and knowledge problems. The calculus is simultaneously a theory of self-governance and a tool for robust political economy analysis. Applying this framework to the case of public administration leads to the conclusion that private goods (such as medicine) tend to be over-regulated, public goods tend to be under-regulated (such as enabling too much pollution), and regulatory agencies tend to be over-centralized (most of them should either be replaced with certification markets or moved to state level).

---

Historical Path Dependence in Intergovernmental Tax Arrangements

Abstract : This paper investigates the role of deep historical elements in shaping intergovernmental tax arrangements as an alternative to the various modern-day features suggested by economic theories. We connect historical elements and key explanatory factors embedded in ethno-cultural diversity and geography to new indicators measuring the taxing rights of sub-national governments in many countries. We estimate the effects of economically relevant and historical institutional variables on the current design of the multi-layer tax structure across more than 70 countries in Africa, the Middle East, and Asia. The results confirm the relevance of the historical variables. Sub-national governments in countries with a higher degree of pre-colonial state centralization tend to have greater discretionary power over tax matters today. The path out of colonization also matters: countries that have experienced a violent independence movement tend to have a more centralized tax structure. Contrary to the conventional view, ethno-cultural diversity falls short in explaining multi-layer tax arrangements. However, the standard economic theories are not all irrelevant: country size and terrain ruggedness tend to imply greater decentralization of tax-related decisions. The results are robust to an extensive set of control variables and a range of IV-GMM estimations using ecological diversity, the Tsetse suitability index, and Neolithic transition timing as instrumental variables for pre-colonial centralization.

---