Book contents
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
15 - Deregulation and Managed Competition in Network Industries
Published online by Cambridge University Press: 29 October 2009
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
Summary
HOW SHOULD REGULATORS approach the competitive transformation of network industries? The temptation is to “manage” the competitive transition so as to determine the outcome of competition. Thus, paradoxically, the process of deregulation often brings about increased regulatory intervention in the marketplace and correspondingly greater administrative costs and market inefficiencies. The result is neither fish nor fowl, neither a regulated market nor a competitive one. The benefits of competition do not materialize. Partial deregulation distorts economic incentives in a manner that is far worse than traditional rate-of-return regulation or newer forms of incentive regulation. The staffs and budgets of the regulatory agency swell as they undertake the impossible task of managing markets. The problem is akin to privatization in planned economies. Government policymakers must be willing to forsake power and influence over the economy, and to trust what they sometimes view as the “chaos” of the marketplace.
Regulators are concerned with achieving competition “fairly,” yet markets are well known for their efficiency properties, rather than the equity of the outcomes that they produce. Economists may posture as purists and assert that it is misguided for regulators to pursue any goal other than economic efficiency. However correct that position may be as a matter of theory, it does not take the institutional setting of regulation as it really is. Consequently, although economists may consider the definition of “fair competition” to be an oxymoronic undertaking, it is nonetheless necessary to supply regulators with an operational definition of fairness that does not attempt to specify outcomes. They need a set of objectives that does not perpetuate regulation but rather lets regulation recede as competition progresses.
- Type
- Chapter
- Information
- Deregulatory Takings and the Regulatory ContractThe Competitive Transformation of Network Industries in the United States, pp. 495 - 534Publisher: Cambridge University PressPrint publication year: 1997