Paper short abstract:

This paper aims at identifying whether interventionist regulation might be a path to corruption. We answer the question through the analysis of the outcomes generated by the telecommunication sector's privatization in Brazil, Germany, Italy and Mexico during the 1990s.

Paper long abstract:

The literature evaluating the impacts of corruption is vast but scarce when it comes to explaining why corruption was initiated. This paper aims to present a contribution to the field by identifying whether interventionist regulation might be a path to corruption. The outcome might be helpful to improve privatization reforms and the legislation framework of regulated sectors.

It takes into consideration the ideal types of governance suggested by Knill (2004) to narrow its corpus to the telecommunication sector which was heavily impacted in Brazil, Germany, Italy and Mexico since the privatization of the sector took place in the 1990s.

The methodology is based on case analyses of the privatization process and its outcomes in the four selected countries. After a literature review aiming at defining a conceptual framework, we describe the whole process in each country, their regulatory boundaries and alleged corruption cases. Finally, we argue on the linkages between these scandals and the adopted regulation.

Our assumption is that interventionist regulation might be a path to corruption when, as evidenced by the analyzed cases, a newly created oligopoly concentrates a high amount of economic power while being restricted by strict regulatory boundaries.

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