Original scientific paper
Development and effects of regulatory agencies in the USA: Successful model for Europe?
Ivana Bajakić
; Faculty of law, University of Zagreb, Zagreb, Croatia
Abstract
The regulatory agencies emerged in the late 19th century in the USA because of the need for regulating municipal services, which until then had been considered a natural monopoly. With a view to protecting the consumer and public interest, the regulatory agencies act as a corrective of market deficiency and promoter of entrepreneurship. Although they are believed to have had quite a few shortcomings, regulatory agencies have proved to be capable of survival and evolution. The purpose of this study is to give an outline of the emergence of regulatory agencies in the United States and effects and problems that followed, and to contribute to the discussion on the role of regulatory agencies in Croatia. The emergence of regulatory agencies in the United States was connected with the development of municipal services; the distribution of electric energy, gas, water, railway and public transport, etc. In the late 19th century, the United States experienced strong economic growth and development, followed by great technological progress and the strengthening of entrepreneurship, and the consolidation of the business sector. At first, municipal services were regulated at the level of local government by a system of concessions and the services functioned under strong competition. With time, this system met with a lot of opposition and regulatory agencies began to crop up, first at the state level and later at the national level. The purpose of setting up regulatory agencies was to bring together reputable experts from particular areas and engage them in small but efficient organizations. These organizations would not be part of the govenment administration, would not depend on private or state interests and would serve to protect and promote areas of public interest. In practice, the regulatory agencies soon showed their human side – imperfection. Notwithstanding their numerous positive and negative effects, and in spite of controversies regarding their legal status, i.e their failure to fit into the traditional tripartite division of power, and despite sharp criticism voiced by economists regarding their effectiveness and independence, regulatory agencies survived and continued to develop. They were now being set up in other countries too. In Europe, the model of regulatory agencies became popular with the beginning of the liberalization of market services, which in the past had been owned and administered by the government. For lack of a better institutional form of regulating activities of special social and state interest, discussions on improving the system of independent regulatory agencies were to continue for a long time.
Keywords
regulatory agencies; municipal services; regulation
Hrčak ID:
51985
URI
Publication date:
24.4.2010.
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