A Law and Economics Analysis of Lobbying Regulation Towards an optimal structure through the Cost Indicator Index Een rechtseconomische analyse van regelgeving voor lobbying Naar een optimale structuur door middel van de Cost Indicator Index Proefschrift ter verkrijging van de graad van doctor aan de Erasmus Universiteit Rotterdam op gezag van de rector magnificus Prof.dr. H.A.P. Pols en volgens besluit van het College voor Promoties De openbare verdediging zal plaatsvinden op dinsdag 1 juli 2014 om 15.30 uur door Duško Krsmanović geboren te Višegrad, Bosnië-Herzegovina 1 Promotiecommissie Promotors: Prof.dr. M.G. Faure LL.M. Prof.dr. L.A. Franzoni Co-promotor: Dr. S. Serenari Overige leden: Prof.dr. L.J.J. Rogier Prof.dr. N. Rickman Dr. S.E. Weishaar 2 This thesis was written as part of the European Doctorate in Law and Economics program A collaboration between 3 4 Acknowledgement I can easily say that writing this thesis was by far one of the most challenging things I have done up to now. Not only intellectually, but most of all this process was a training of will and determinacy. A playground for competing with myself, which is always the most difficult competition one can chose. Still, I have to say that throughout the process I received a lot of support from many great people. To some of them I would like to say how much I appreciate their support. A special thanks to my family. First of all to my mother and father for all the sacrifices that you have made on my behalf. To my sister, for modesty in terms of presents expectation from the older brother who was just a student living abroad:). Nevertheless, I would really like to thank my entire family and wonderful cousins for always being a great support in whatever I did. I would also like to thank all of my friends who supported me in writing, and incented me to strive towards my goal. Who gave me the strength to make that additional mile ahead. Dejan, Dinka, Nikola, Kornel, Zile, Vess, Giovanni, Lisa, Radivoje, In... the EDLE crew, and many others that I cannot name all, made it much easier and ultimately funnier which is most important to me. I would like to express my special appreciation and thanks to my advisors Professor Dr. Michael Faure, Professor Dr. Luigi Franzoni and Dr. Sandro Serenari for their dedicated and supporting guidance in the past three years. My gratitude also goes to my committee members for their valuable comments and improvements they suggested to my work. A very special thanks goes to Professor Dr. Ksenija Dumicic and Mr. Srdjan Dumicic for their availability, support, advice and wonderful time we spent together in the past years. Similarly, I would like to thank to Professor Dr. Raj Chari for his time and availability to review my work in its early stage. Of course, my special gratitude goes to all dedicated staff who made my life easier, but I would give my very special thanks to Ms. Marianne Breijer-de Man, whose patience and dedication to me and my colleagues was truly inspiring and incredibly helpful. 5 6 TABLE OF CONTENTS INTRODUCTION 4 CHAPTER I - A LAW AND ECONOMICS VIEW ON EU-LOBBYING REGULATION LITERATURE 17 1.1. Introduction ................................................................................................................................................ 17 1.2. Theoretical and policy treatment of lobbying regulation in the last decade. ............................................. 17 1.3. Theories and policy positions regarding the regulation of lobbying – a comparison and the EU perspective. .................................................................................................................................................................... 23 1.4. Comparative studies on lobbying regulation .............................................................................................. 27 1.5. The EU studies on lobbying regulation – a sui generis perspective ............................................................. 34 1.6. Conclusion of Chapter I - the future research challenges and needs ......................................................... 38 CHAPTER II - LOBBYING REGULATION IN THE POLICY ARENA AND CURRENT TOOLS FOR COMPARATIVE ASSESSMENT OF LOBBYING REGULATIONS 42 1. INTRODUCTION ....................................................................................................................................................... 42 2. SETTING THE OBJECTIVES AND THE RESEARCH QUESTIONS ................................................................................................ 43 3. REASONS FOR IMPROVEMENT OF COMPARATIVE ASSESSMENT TOOLS FOR THE REGULATION OF LOBBYING ................................. 44 4. WHY IS IT SO IMPORTANT TO IMPROVE TOOLS FOR THE COMPARATIVE ASSESSMENT OF LOBBYING REGULATION? ....................... 47 5. SECTION I .............................................................................................................................................................. 48 5.1. An overview of the recent dynamics and development of lobbying regulation .......................................... 48 5.2. The US lobbying regulation system – an overview and current tendencies ................................................ 48 5.3. The European lobbying regulation system – an overview and recent regulatory tendencies ..................... 57 6. SECTION II: THE STANDARD TOOLS FOR ASSESSMENT OF REGULATION IMPACT – REGULATORY IMPACT ASSESSMENT ANALYSIS (RIA) AND LOBBYING REGULATION ...................................................................................................................................... 66 6.1. What do we use RIA for, and what are the most common methods? ........................................................ 66 6.2. The nature of the benefits of lobbying regulation ...................................................................................... 69 6.3. Cost assessment in practice – the UK’s Cost Compliance Assessment as an example ................................ 70 6.4. The depth of the analysis – the principle of proportionality in the application of Impact Analysis ............ 73 6.5. Problem of methodological diversity of RIAs – the scope and application of RIA on the regulation of lobbying. ..................................................................................................................................................... 74 6.6. Application of RIA in the US – a problem of the scope of RIA from a lobbying regulation perspective ...... 75 7. SECTION III: TOOLS FOR (COMPARATIVE) ASSESSMENT OF LOBBYING REGULATION ............................................................... 80 7.1. What is the CPI index and when do we use it? ............................................................................................ 80 7.2. Classification of lobbying regulations ......................................................................................................... 89 7.3. Limits of the CPI method: ex-ante or only ex-post application? .................................................................. 92 8. CONCLUSION OF CHAPTER II ...................................................................................................................................... 93 CHAPTER III - DEVELOPMENT OF THE COST INDICATOR INDEX (CII) 95 1. INTRODUCTION 95 2. GENERAL FEATURES OF THE COST INDICATOR INDEX ....................................................................................................... 95 3. WHAT CAN BE LEARNED FROM RIA WITH REGARDS TO COST INDICATION? .......................................................................... 96 4. WHAT IS AN OPTIMAL DEPTH LEVEL OF THE ANALYSIS? .................................................................................................... 98 5. GENERAL REGULATORY COST INDICATORS AS A STARTING POINT FOR THE CII DESIGN .......................................................... 102 6. THE CPI INDEX AS METHODOLOGICAL FOUNDATION FOR THE COST INDICATOR INDEX ......................................................... 104 1 7 6.1 Methodological framework – the analysis of funding elements of the CII................................................ 112 7. EMPIRICAL EVIDENCE – CALIBRATING THE VALUES OF THE CII .......................................................................................... 119 7.1 Questionnaires – anecdotal evidence from the public and private sector ................................................ 120 7.2. The sample ................................................................................................................................................ 126 8. RESULTS OF THE SURVEY AND THEIR INCORPORATION INTO THE CII ................................................................................. 131 9. ADDITIONAL EMPIRICAL INFORMATION ON NATURE OF THE COSTS OF LOBBYING REGULATION .............................................. 140 10. METHODOLOGICAL CONCERNS AND LIMITATIONS OF THE DATA ...................................................................................... 144 10.1. Robustness ................................................................................................................................................ 145 10.2. Relation of the actual enforcement and compliance costs – how accurate is the CII? ............................. 147 10.3. The CII and literature on Central Banks Independence and Regulatory Independence. How does CII look in comparison with other indices? ...............................................................................................................