The political economy of telecommunications regulation

This dissertation consists of three chapters that examine aspects of the political economy of local telecommunications regulation in the United States and the European Union, using perspectives from both the Chicago school of regulation (interest group politics) and new institutional economics (emphasizing the importance of the institutional environment of regulation).;In the first chapter, I show that interests in the US local telecommunications industry have a sophisticated understanding of the political process, and behave strategically in their allocation of contributions to state legislators, as if seeking to purchase influence over regulatory policy. I find that interests respond defensively to contributions from rivals, take into account the configuration of support available to them in both the legislature and the regulatory commission, and vary their contributions according to variations in supply prices for influence of different legislatures. This strategic behavior supports a theory that commercially motivated interests contribute campaign resources in order to mobilize legislators to influence the decisions of regulatory agencies.;The second chapter is a natural extension of the first. Having examined regulatory related determinants of contribution patterns, I turn to examine whether there is evidence in the US local telecommunications industry of a link between contributions and regulatory outcomes. I begin by observing remarkable variation, state by state and over time, in regulatory outcomes in the industry, and explain much of this as the result of between and within state variation in political and institutional environments. In particular, whereas prior literature is inconclusive regarding the existence of a link between contributions and legislative outcomes, I find a significant effect of contributions on regulatory outcomes in this industry.;The third and final chapter is similar in empirical design to the second, but the context is now the European Union, necessitating a somewhat different theoretical focus. In this chapter I examine the effects of public ownership and regulatory agency independence on regulatory outcomes in EU telecommunications. I report evidence that governments with ownership shares in incumbent Public Telecommunications Operators exert political influence over regulatory outcomes that are the responsibility of separate regulatory agencies, and I demonstrate the importance of formal institutional arrangements promoting regulatory independence in ensuring unbiased regulatory policy.