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Economic Regulation: a review of issues
Author(s) -
Parker D.
Publication year - 2002
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/1467-8292.00202
Subject(s) - natural monopoly , competition (biology) , monopoly , economics , corporate governance , state (computer science) , service (business) , industrial organization , market economy , public economics , business , economy , finance , ecology , algorithm , computer science , biology
This article surveys a range of issues relating to economic regulation. It begins by examining market and state failures which provide the basis for arguments in support of regulation. Concentrating on natural monopolies, the article outlines the main forms of economic regulation, namely rate–of–return or cost–of–service regulation, price–cap regulation, and sliding scale regulation, a hybrid between price–cap and rate–of–return approaches. Reference is made to the broad phases that need to be considered in the evolution of natural monopoly regulation. These are concerned with regulating the incumbent monopoly, promoting and policing the development of competition, and maintaining competition once it has been introduced. The last phase may be better served through the use of effective national competition laws rather than dedicated sector regulation. The article also examines the range of factors that are likely to affect the economic efficiency and effectiveness of regulation. These involve a mixture of economic, political and governance conditions.