Why do Some Independent Regulatory Agencies Maintain Strong Ties with the Regulated Industry while Others Fully Insulate Themselves from it? Explaining the Variation in the Ties of Regulators in Eight Sectors and Fifteen Countries

Why do some independent regulatory agencies maintain strong ties with the sector they regulate whereas others fully insulate themselves from the regulated industry? In all established democracies, we find independent agencies charged with the task of regulating economic sectors such as the financial sector, the pharmaceutical sector, and the energy sector. Previous research has found that the independence from politics of these regulators varies considerably from one country to another and from one sector to another. Variation can also be found in the strength of the relationship between the organizations and the regulated industry, though much less research has been devoted to this question. Building on the literature on resource dependence theory, regulatory capture, administrative drift and revolving doors, the proposed paper focuses on the ties of regulators in eight sectors and fifteen countries with the regulated industry. The sector and country selection guarantees variation in multi- or uni-level nature of the regulation. This allows for an assessment of the effect of multi-levelness on regulatory power struggles. Introducing a new measurement instrument based on the affiliations of the agencies’ board members, the study aims to explain the variation in the ties with the industry, assessing factors such as policy salience, market concentration, administrative tradition, and political institutions.