Mantzari, D;
Vantaggiato, F;
(2020)
The Paradox of Regulatory Discretion.
Law and Policy
, 42
(4)
pp. 382-403.
10.1111/lapo.12158.
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Abstract
Regulatory authorities in the utilities sector typically employ economic evidence and analysis to make expert discretionary judgements under uncertainty. However, economic analysis does not provide clear answers regarding policy outcomes. This exposes regulators to environmental uncertainty (i.e., uncertainty regarding the reactions of other actors in the institutional system to their decisions). When environmental and policy‐outcome uncertainty are high, discretion takes center stage. Will regulators pursue the course of action suggested by economic analysis and their expert judgement, or not? What explains this choice? To answer these questions, we carry out a comparative analysis of three British regulatory authorities in the utilities sector: the Office of Communications (Ofcom), the Office of Gas and Electricity (Ofgem), and the Water Services Regulation Authority (Ofwat). We consider key sectoral and organizational characteristics, namely the extent of market competition and statutory discretion. We rely on interview evidence and documentary analysis and a principal–agent framework. Our analysis reveals a paradox: when environmental and policy‐outcome uncertainty are high, higher regulatory discretion is associated with a reduction in the importance of the role of economic expertise in regulatory decisions. Our findings call for a normative reflection on the role of expertise in regulated sectors.
| Type: | Article |
|---|---|
| Title: | The Paradox of Regulatory Discretion |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1111/lapo.12158 |
| Publisher version: | https://doi.org/10.1111/lapo.12158 |
| Language: | English |
| Additional information: | This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Laws |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10095732 |
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