Does regulatory independence translate into a higher degree of liberalization? - Evidence from EU energy regulators

Independent regulatory authorities are a basic prerequisite for a successful liberalization process. However, contrary to what is expected, a first glimpse at a small sample of electricity and gas regulators operating in 16 European countries reveals a negative relationship between their formal autonomy from politicians and the scope of market reforms. These findings might suffer from endogeneity, though, so we draw on political scientists' explanations for diverging independence levels to construct appropriate instruments. The 2SLS-results then confirm conventional wisdom: the higher the degree of regulatory autonomy, the higher the level of liberalization.