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.