Regime Similarity

From existing empirical findings we can derive the assumption that a shift away from the interventionist welfare state to some form of regulatory state has indeed taken place.

However, one could argue that the regulatory state is not a new phenomenon since regulation has always existed since the emergence of modern statehood (Müller 2002: 4).

The issue therefore centres around the question whether we have indeed experienced a fundamental transformation towards the regulatory state or whether only the appearance of the regulatory state has changed. If we accept the proposition that public ownership constitutes one alternative form of economic regulation (see chapter 2), we would need to accept that not the general mode of governance, that is regulation, has changed but simply its form and appearance. And this transformation of the form or appearance of regulation can best be captured by the regime concept.

Convergence can be defined as a process of “becoming” rather than a condition of

“being” more alike (Bennett 1992: 219). It thus includes a dynamic perspective which represents the change or transformation from one condition to another. This study, however, will not be able to cover all three reform dimensions across time and can thus not directly derive assumptions about convergence dynamics. However, the data that are used can be employed for assessing regime similarity through the cross-country comparison of reform outcomes. Prior to regulatory reform in infrastructures, the situation was characterized by public monopolies with 100 per cent state ownership, no competition in the market and the absence of independent regulatory authorities. Thus, an analysis of the

status quo two decades after the beginning of the reform process should reveal certain dynamics among the EU members.²⁶

I have already pointed to possible limitations of the regulatory state hypothesis.

These limitations are mainly derived from results of cross-country and cross-sectoral case studies which emphasize the importance of national institutions. The fact that all countries have engaged in programmes of regulatory reform does not suffice to speak of similarity.

We need to look at the issue more closely by analyzing the development of the various elements of regulatory regimes. As findings of the literature suggest, we should expect a variety of regimes across sectors and countries. While it might be possible to observe similarity along one regulatory dimension, developments along other dimensions might reveal dissimilarity instead. A country might, for instance, have fully liberalized its market for infrastructure services under the auspices of a successfully operating NRA, while the shares of the dominant operator are still entirely or partially controlled by the government.

We could also think of a situation in which the former state-owned infrastructure company has been fully privatized but where institutions of reregulation do not function properly so that effective competition in the market is non-existent. These are just two of several possible scenarios.

For obvious reasons, it is difficult to assess regime similarity in absolute terms. What is possible, however, is to assess similarity across subpopulations, i.e. groups of countries or across sectors. Maybe we detect significant differences in reform outcomes among the CEEC-10 and the EU-15? Or we find different outcomes for the telecommunications and the electricity sector within both groups of countries. The assessment of this relative diversity would contribute much to our picture of regulatory reform in the enlarged Union.

For instance, a relatively high regime diversity among the CEEC-10 compared to that among the EU-15 would indicate that factors other than Europeanization and globalization pressures are responsible for the outcomes of regulatory reform. Such an analysis can thus provide the basis for further case-study research on the interactions between exogenous pressures and national implementation mechanisms. In case we do indeed find significant

26 Such a perspective, however, excludes any projection on future developments which constitute important aspects for a complete analysis of regime similarity.

dissimilarity of national reform developments across the CEEC-10, we could ask for the determinants of that diversity, assuming that all of these countries have been exposed to similar exogenous forces in course of the enlargement process.

A similar logic applies to developments across sectors. There is indication that some sectors show greater regime similarity across countries than others. We know, for instance, that over the last two decades regulatory reform in telecommunications has proceeded much faster than in any other infrastructure sector. However, even in the case of telecommunications we might come to the conclusion that a significant level of diversity still exists. While most markets for telecommunications equipment and services have been liberalized due to strong international pressures and an proactive competition policy of the Commission, there seems to remain significant variation as regards privatization. In addition, NRAs still seem to possess significantly different structures and functions and, thus, levels of independence from political and administrative influence. Thus, the question arises whether regime diversity in telecommunications is relatively higher than diversity in the electricity sector, independent of the countries we are analyzing.

We can thus formulate the second research question:

Are there significant differences in regime similarity, first, across the EU-15 and the CEEC-10 and, second, across the telecommunications and the electricity sector?

Research Question 2

In other words, the study seeks to answer whether we can observe diversity or similarity as regards the outcome of privatization, liberalization and reregulation policies.

One goal is to come up with a topology or categorization of regulatory regimes in the three infrastructure sectors. In this context, it will be interesting to analyze if there are any significant differences between the EU-15 and the CEEC-10. Especially interesting is the question as regards the regulatory situation in the new member states because this region has so far largely been excluded from systematic analysis. In addition, the study also looks

at cross-sectoral differences at an aggregate level. This in turn allows us to assess another mechanism that is heavily disputed in the regulation literature: the impact of internationalization or Europeanization pressures.