Internal Market, Industry, Entrepreneurship and SMEs

Effects of regulation on service quality

Effects of regulation on service quality
Published on: 24/01/2019
The European Commission contracted an independent study to deepen our understanding of the relationship between professional regulation and service quality, as well as to contribute to the development of empirical research methods and strategies to analyse this complex relationship.

Professional services are at the core of the Single Market and Commission policy initiatives. Given that up to now there has been very little research on the empirical relation between the regulation of professions and – broadly defined – quality of services, these case studies intend to contribute to enhancing the evidence base on the costs and benefits of professional regulation. 

The 6 profession- and country-specific case studies empirically assess the effect of regulation on a number of quality indicators. They concern lawyers in Poland, architects and engineers in Germany, pharmacies in Italy, tourist guides in Greece, driving instructors in the UK and ride-hailing service providers in London and Dublin. 

The studies confirm that quality is not only difficult to measure but also multidimensional. In the Polish market for lawyers, it finds little change in the overall quality of legal services as perceived by clients and judges. following the relaxation of entry requirements, yet the number of complaints per active advocate decreased. Overall quality of services provided by German architects and engineers expressed by peer ranking scores decreased with higher market concentration in response to higher insurance costs and higher service prices. In the Italian pharmacy market, the availability of pharmacies seems correlated with a decrease in the number of hospital admissions related to influenza, suggesting a possible link between the availability of the services offered by pharmacists and consumer health. Greek tourist guides’ level of education increased post reform but the guides trained under the new regime are more likely to receive lower consumer ratings. More stringent regulations pushed many driving instructors out of the UK market with no evidence of improved quality of instructors or of learner drivers. Finally, more stringent licensing regulations for ride hailing drivers in Dublin as opposed to London have no effect on customer satisfaction ratings or measures of hard breaking and accelerations.

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Effects of regulation on service quality