Sectoral Regulators and the Competition Authority: Which Relationship is Best?

We consider the interplay between regulatory agencies with overlapping competencies: for example, a competition authority and a sectoral regulator. This reflects the current situation in the European Union and in the US. We analyse how authorities’incentives to act are affected if they can decide independently, or must follow each others’ opinions, respectively, and consider how this relationship performs in the presence of institutional biases and lobbying efforts. A higher likelihood of closing a case tends to be achieved when the authorities act independently of each other: the probability of coming to a decision is higher, and decisions are less vulnerable to lobbying.