MEDIDAS DE PREVENCIÓN DE UN EVENTUAL INCENDIO

This sub-section introduces the second independent variable of this book, based on the ‘actor constellations’ building block of the Inter-relational Institutionalism, i.e. the ‘regulatory compatibilities’ between the domestic and the foreign jurisdiction. Following the deduction of preference-constituting ‘regulatory institutions’ as ‘regulatory authority structures’ and ‘regulatory principles’, it divides the independent variable ‘regulatory compatibilities’ into ‘compatible regulatory authority structures’ and ‘compatible regulatory principles’. Based on the constellations of ‘regulatory compatibilities’ between the domestic and the foreign jurisdiction on an issue, it deduces four hypotheses that combine variation in regulatory compatibilities to the outcomes on the dependent variable delineated in chapter 3.3.

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It is in this sub-section that the Inter-relational Institutionalism differs substantially from the conventional actor-centred institutionalism due to the incorporation of the interdependence assumptions from the New Interdependence Approach. To emphasise this distinction, this sub-section first reiterates the understanding of actor constellations of the Inter-relational Institutionalism. It then presents possible combinations of regulatory authority structures and regulatory principles between the domestic and the foreign jurisdiction. Based on these combinations, it then deduces four hypotheses that connect combinations of regulatory compatibilities to the constraints on the choice of a regulatory cooperation strategy.

Chapter 4.2.2. has argued that the compatibility of domestic and foreign incentive structures shapes the conflictiveness of domestic actor constellations and thus determines the ability of actors to cooperate within their discretionary authority. ‘Compatibility’ has been defined as the absence of conflicting incentive structures in regulatory institutions. It has argued that cooperation under conflicting incentive structures constituted by domestic and foreign institutions would set incentives which conflict with the preferences of the ‘main’ domestic actor that are derived from domestic incentive structures. If the domestic main actor sought to engage in cooperation, other domestic actors would mobilise and seek to intervene, increasing uncertainty. Chapter 4.2.2. has concluded that conflictual potential domestic actor constellations due to conflicting incentive structures between the domestic and foreign jurisdiction lead the main domestic actor not to pursue cooperation. Compatibility can be conceived with regard to both regulatory authority structures and regulatory principles. The following paragraphs will discuss possible combinations of regulatory compatibilities.

To keep analytical complexity manageable, regulatory authority structures shall be conceived as compatible and incompatible. As defined above, compatibility denotes the absence of conflicting incentive structures. To derive expectations for the influence of the compatibility of regulatory authority structures on regulators’ formation of strategies, actor constellations under different constellations of domestic and foreign authority structures shall be examined. Chapter 4.3.1. has deduced that the preferences of regulators constituted by domestic regulatory authority structures are shaped by the horizontal and vertical distribution of regulatory authority, i.e. the division of regulatory authority between different levels of government and the division between state and private actors. Moreover, the Inter-relational Institutionalism shares the assumption of the New Interdependence Approach (see also Young, 2015a) that regulators at the central level are mostly likely to seek regulatory cooperation with regulators from other jurisdictions on issue areas in which they have regulatory authority themselves35_.

35 _{This assumption does not exclude that regulators at the central level may intentionally engage in regulatory}

cooperation on issue areas on which they do not have regulatory authority yet in order to change domestic institutions. This case is studied by Zdenek and Müller (2016). The authors acknowledge, however, that their argument on the ability to use the ‘international’ level as an ‘exit from the domestic institutions’ relies on the shared perception of a crisis of domestic institutions among some societal actors and the legitimacy of a solution to the crisis of domestic institutions provided by an international organisation. While societal actors can be mobilised to advocate the domestic adoption of an international policy solution that subsequently offers them global market access, it is difficult to mobilise societal actors for domestic institutional change entailing the

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It also shares the assumption of both ‘Open Economy Politics’ and the New Interdependence Approach that regulators (as well as societal actors) from the domestic central level mostly engage with regulators (and societal actors) from the foreign central level.

If regulatory authority in the domestic jurisdiction is centralised – it shall be assumed to be so by definition for the purpose of this analytical framework, this leaves two options for the allocation of regulatory authority in the foreign jurisdiction. First, regulatory authority can be allocated to regulators (or government actors) at the central level. Second, regulatory authority may be non-centralised. In the latter case, it may be shared between government actors at central- and sub-central levels. Besides, it may be shared with or entirely allocated to private actors. This is the case if the foreign regulator does not consider an issue sufficiently salient to have it regulated by state actors.

If regulatory authority in the foreign jurisdiction is non-centralised, a foreign regulator with which the domestic regulator interacts is likely to be reluctant to adopt or recognise policies because it faces opposition from regulators at sub-central levels who act as veto players. If the domestic and foreign regulator agreed to cooperate, the foreign regulator would be unable to commit to an implementation of the cooperation by both the central and the sub-central regulators. At the same time, the foreign regulator would be unwilling to mobilise resource unless ‘its’ institutions are perceived to be in crisis (for this argument see Thelen, 2004). Regulatory cooperation with the foreign regulator in this constellation would thus asymmetrically expand the geographical scope of domestic and foreign regulations. The acceptance of this asymmetry and the acknowledgement of regulatory authority to sub-central foreign regulators by the central domestic regulator would then provide sub-central regulators with an incentive to demand greater authority over the setting of rules themselves. This would give rise to a conflictual domestic actor constellation.

Likewise, if in the foreign jurisdiction regulatory authority is delegated to private actors, the agreement of the domestic regulator to adopt or accept the regulations of the foreign jurisdiction developed by private actors would provide an incentive for domestic private actors, which are societal actors, to demand a regulation by private actors in the domestic jurisdiction as well. The foreign regulator would unlikely change the distribution of authority in its jurisdiction as the concession of authority to private actors indicates that it does not consider the issue as sufficiently salient to merit an allocation of limited regulatory resources. The mobilisation of domestic societal actors would again give rise to a conflictual domestic actor constellation.

The emergence of a conflictual domestic actor constellation would, however, reduce and undermine the ‘turf’ of the domestic regulator. In this constellation, the domestic regulator cannot enhance its autonomy

adoption of a foreign solution due to the competitive disadvantage this would create for them with regard to foreign competitors (cf. Newman & Farrell, 2014: 27; Büthe & Mattli, 2011). To advocate institutional change, central- level regulators then rely on the perception of institutional change. Both conditions restrict the applicability of the argument of Zdenek and Müller (2016) to bilateral regulatory cooperation.

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through regulatory cooperation. From the preference function of the domestic regulator outlined in chapter 4.3.1. it thus follows that in this constellation it cannot use the overlap of jurisdictions as an opportunity structure. A reduction of autonomy opposes the preferences of the domestic regulator, making the status quo preferable to an outcome under regulatory cooperation.

If regulatory authority is allocated at the central level in both the domestic and foreign jurisdiction, in turn, both domestic and foreign regulators share a perception of salience and similar veto players on an issue. This makes their incentive structures comparable. From the definition above it follows that regulatory authority structures are also compatible. Regulatory cooperation does thus not undermine the autonomy of the domestic regulator. Instead, as the domestic regulator cooperates with a foreign regulator with whom it shares an overlapping jurisdiction, the resolution of regulatory conflict reduces the scope for intervention by other actors. If the domestic and the foreign regulator resolve regulatory conflict, they reduce the possibility for other domestic regulators to introduce alternative policies. At the same time, they reduce the possibility for societal actors to engage in arbitrage between domestic and foreign regulations. Moreover, they reduce the possibility for societal actors to lobby regulators in either jurisdiction for a lowering of the regulatory burden in order to increase the competitiveness of domestic firms. It follows from the theoretical argument laid down above that if regulatory authority is allocated at the central level in both the domestic and the foreign jurisdiction, regulators can use regulatory cooperation to enhance their autonomy in line with their preferences.

The distribution of regulatory authority structures can now be combined with the adherence to regulatory principles, reflecting the integration of structure and substance outlined in chapter 4.1.1. To reduce analytical complexity, regulatory principles shall also be operationalised dichotomously as ‘compatible’ and ‘incompatible’. From the definition of compatibility above it follows that regulatory principles are compatible if they do not entail conflicting incentive structures. From the definition of regulatory principles, in turn, it follows that incentive structures are not conflicting if they do not produce cognitive conflict that leads regulators to approximate rational behaviour differently. Incentive structures are conflicting if regulatory principles encoded in past policies establish a guideline for legitimate behaviour which rules out the full compliance with an alternative guideline36_.

This now allows making statements about the choices of regulators that seek to behave rationally. If regulatory principles are incompatible, regulators in the domestic and foreign jurisdictions approximate rational behaviour differently. As a consequence, they have different understandings of legitimate regulatory behaviour. If the domestic regulator adopts or accepts a regulation of the foreign regulator, it creates a cognitive conflict. The alternative acceptance or the deviation from the domestically institutionalised regulatory principles would establish the possibility to regulate an issue or to launch a

36 _{To illustrate this point through an example, the principle to follow the precautionary principle in the EU and to}

take precautionary measures in case available scientific evidence is inconclusive (e.g. Vogel, 2003) conflicts with a principle to only adopt measures if these can be positively supported by scientific evidence.

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product for firms which is not allowed under domestic regulatory principle. This would undermine the subjectively defined legitimacy of the behaviour of the domestic regulator. In line with the preferences deduced in 4.3.1., the domestic regulator therefore expects that other actors, government officials or societal actors will intervene as a response to the regulator’s choice and thus curtail its autonomy. To avoid this political intervention, the domestic regulator should thus not cooperate with the foreign regulator if regulatory principles on an issue are incompatible.

If regulatory principles are compatible, the domestic and foreign regulator share understandings of legitimacy and approximate rational behaviour in a similar way. If they adopt or recognise mutual decisions, they can therefore confirm to each other that their regulations are legitimate responses to an issue. The confirmation of the legitimacy by a regulator with whom the domestic regulator shares understandings of legitimacy thus enhances the subjectively defined legitimacy of its choices. As the foreign jurisdiction adopts or accepts the regulatory choices of the domestic regulator, it can interpret the geographical expansion of its choices as evidence that their choices represent a legitimate response. At the same time, this contributes to insulate the domestic regulator against demands from other regulators or societal actors and enhances its autonomy. Cooperation under compatible regulatory principles thus enhances the legitimacy as well as the autonomy of the domestic regulator and is in line with her preferences deduced in chapter 4.3.1.

In a next step, the actor constellations for different compatibility constellations of regulatory authority structures and regulatory principles need to be applied to and connected with the regulatory cooperation strategies defined in the typology in chapter 3.3. Four possible constellations are theoretically conceivable.

First, if both regulatory authority structures and regulatory principles between the domestic and the foreign jurisdiction are compatible, regulatory cooperation can enhance the autonomy and the legitimacy of the domestic regulator. The domestic regulator should therefore seek to make regulatory cooperation as deep and comprehensive as possible. This implies that it should seek to cooperate with the foreign regulator on policies at high depth. Due to domestic institutional restrictions, notably the binding adoption of legislation by the legislator, the domestic regulator cannot adopt legislation without the consent of the legislator. However, it can propose to the legislator to harmonise legislations. To avoid political intervention, the domestic regulator will concentrate on regulatory approximation through the formulation and adoption of technical regulations and standards under its discretionary authority. Besides, the domestic regulator can seek to elaborate draft structures for the adoption of future regulation together with the foreign regulator with a view to shape the space for political intervention by the legislator. For this reason, if both regulatory authority structures and regulatory principles are compatible, the domestic regulator should pursue a strategy of ‘regulatory alignment’:

H2a: If both regulatory authority structures and regulatory principles are compatible between the foreign and domestic jurisdiction, the domestic regulator chooses a strategy of ‘regulatory alignment’.

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Second, if regulatory authority structures are compatible, but regulatory principles are incompatible, the compatibility of regulatory authority structures suggests that regulatory cooperation can enhance the autonomy of the domestic regulator. As regulatory authority lies with the central-level regulator in both the domestic and the foreign jurisdiction, the domestic regulator can strive to cooperate over policies to enhance its autonomy. However, as the regulatory principles shaping the behaviour of the domestic and the foreign regulator are incompatible, the domestic regulator simultaneously seeks to avoid adopting policies of the foreign regulator to protect its legitimacy at the status quo level. This suggests that the domestic regulator seeks to avoid changes to domestic regulations.

Nonetheless, the domestic regulator can enhance its legitimacy by establishing regulatory certainty and creating new market access opportunities to certain societal actors, notably firms with transnational activities. As regulations shall not be changed through regulatory cooperation, cooperation can only consist in recognising the ‘equivalence’ of specific regulations. To ensure that this increase in subjectively defined legitimacy towards transnational firms does not come at the expense of other societal actors, the domestic regulator will conduct tests and assessments to show that existing domestic regulatory principles are not undermined as a consequence of regulatory cooperation. This is likely to be possible for only very specific regulations, restricting the depth of regulatory cooperation the domestic regulator seeks to pursue. If regulatory authority structures are compatible, but regulatory principles are incompatible, the domestic regulator should thus pursue a strategy of ‘equivalence’.

H2b: If regulatory authority structures are compatible, but regulatory principles are incompatible between the foreign and domestic jurisdiction, the domestic regulator chooses a strategy of ‘equivalence’.

Third, if regulatory authority structures are compatible, but regulatory principles are incompatible, the domestic regulator can seek regulatory cooperation to enhance its legitimacy. The incompatibility of regulatory authority structures suggests that the domestic regulator should not seek to cooperate on regulations to protect its autonomy. According to the theoretical considerations above, the domestic regulator is thus restricted to cooperate on implementation procedures to enhance its legitimacy (for a clarification of cooperation on regulations and implementation procedures see chapter 3.1.3). The subjectively defined legitimacy of the domestic regulator increases as the implementation procedures institutionalised domestically are also recognised in the foreign jurisdiction and considered as an adequate method to ascertain the achievement of a regulatory objective. Moreover, the legitimacy of the domestic regulator increases as cooperation on implementation procedures resolves conflicts and divergences on implementation procedures. Cooperation then facilitates trade flows, with benefits accruing in particular to firms with transnational operations. Since regulatory principles underlying regulatory principles are compatible, the domestic regulator can expect that the foreign regulator pursues similar objectives with regard to implementation procedures to define its own legitimacy. This results from the argument made in chapter 4.3.1. that implementation procedures are usually designed in

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accordance with the principles underlying regulatory policies. In line with the argument laid down in chapter 4.3.1., the domestic regulator verifies, however, if foreign implementation procedure principles are compatible implementation procedure principles. If implementation procedure principles were to conflict, regulatory cooperation would lead to legitimacy losses and regulatory cooperation would be against the preference of the regulator.

Yet, regulatory cooperation in this constellation still requires that the domestic regulator overcomes incompatible regulatory authority structures. This is more likely for implementation procedures than for regulatory policies. As noted in chapter 3.1.3., implementation procedures are in most jurisdictions subject to networks of administrative authorities due to resource constraints of regulators. Besides, because of their lower salience they are subject to political intervention only in times of a crisis of existing implementation procedures. Even in the case that implementation procedures are allocated to sub-central administrative authorities, cooperation on implementation procedures is thus unlikely to lead to domestic political intervention and a loss of autonomy. The domestic regulator might, however, demand reassurances from the foreign regulator and likewise offer reassurances to the foreign regulator that cooperation on implementation procedures does not lead to a loss of autonomy. As a result, if regulatory authority structures are incompatible, but regulatory principles are compatible, the domestic regulator should pursue a strategy of ‘alignment of implementation procedures’.

H2c: If regulatory authority structures are compatible, but regulatory principles are incompatible between the foreign and domestic jurisdiction, the domestic regulator chooses a strategy of ‘alignment of implementation procedures’.

Fourth, if both regulatory authority structures and regulatory principles are incompatible, the domestic regulator can neither expect to enhance its autonomy or legitimacy through regulatory cooperation. Regulatory cooperation can only be an opportunity structure for the regulator to save administrative resources while protecting its autonomy and legitimacy. The domestic regulator can only seek to protect its autonomy and legitimacy through regulatory cooperation by avoiding future regulatory uncertainty, conflict or arbitrage. To save administrative resources, it can seek to shift administrative tasks to the foreign regulator and thereby concentrate its resources on making legitimate regulations. It follows from the categorisation proposed in chapter 3.3. that a strategy to save administrative resources is to exchange information and data with the foreign regulator, given that the foreign regulator supplies this information and data in the quality demanded by the domestic regulator. At the same time, ‘information exchange’ and data exchange also correspond to the policy preference of the domestic regulator to avoid future regulatory uncertainty. As a consequence, if both regulatory authority structures and regulatory principles are incompatible, the domestic regulator should pursue a strategy of ‘information exchange’.

H2d: If both regulatory authority structures and regulatory principles are incompatible between the