Access Price Regulation and Strategic Infrastructure Investment under Free Entry and Exit

This paper analyzes the differential effects of equally restrictive access price regulations in an industry where a vertically integrated firm has a monopoly on the supply of an essential network service and also operates in a competitive product market where firms can freely enter and exit. The vertically integrated firm invests strategically to reduce the cost of using the network before the market competition. When the entry and exit of firms in the product market is free, social welfare is maximized under a hybrid form of price-cap and cost-of-service regulations which induces a smaller cost reduction than price-cap regulation

Regulation, productivity, and growth : OECD evidence

The authors look at differences in the scope and depth of pro-competitive regulatory reforms and privatization policies as a possible source of cross-country dispersion in growth outcomes. They suggest that, despite extensive liberalization and privatization in the OECD area, the cross-country variation of regulatory settings has increased in recent years, lining up with the increasing dispersion in growth. The authors then investigate empirically the regulation-growth link using data that cover a large set of manufacturing and service industries in OECD countries over the past two decades and focusing on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance. Regressing MFP on both economywide indicators of regulation and privatization and industry-level indicators of entry liberalization, the authors find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. In manufacturing the gains to be expected from lower entry barriers are greater the further a given country is from the technology leader. So, regulation limiting entry may hinder the adoption of existing technologies, possibly by reducing competitive pressures, technology spillovers, or the entry of new high technology firms. At the same time, both privatization and entry liberalization are estimated to have a positive impact on productivity in all sectors. These results offer an interpretation to the observed recent differences in growth patterns across OECD countries, in particular between large continental European economies and the United States. Strict product market regulations-and lack of regulatory reforms-are likely to underlie the relatively poorer productivity performance of some European countries, especially in those industries where Europe has accumulated a technology gap (such as information and communication technology-related industries). These results also offer useful insights for non-OECD countries. In particular, they point to the potential benefits of regulatory reforms and privatization, especially in those countries with large technology gaps and strict regulatory settings that curb incentives to adopt new technologies.Labor Policies,Public Health Promotion,Health Monitoring&Evaluation,Environmental Economics&Policies,Economic Theory&Research,Governance Indicators,Environmental Economics&Policies,Economic Theory&Research,Health Monitoring&Evaluation,Health Economics&Finance

Only Little Justification for Regulation in the Postal Sector

European postal markets are to be completely liberalized by the end of 2012 at the latest. At the same time national regulatory frameworks are being adapted to the new requirements. The extent to which the present monopoly suppliers will in future (continue to) be obliged to grant their competitors access to their network is also under discussion. In this respect the postal sector is often compared to the telecoms sector. However, the differences between the two industries are so great that regulation of telecommunications cannot be transferred to the mail sector. Obligations to provide network access and regulations on final prices in particular can scarcely be justified in the mail sector. The regulatory strategy that should therefore be pursued during the liberalization process is one that places the minimal requirements necessary to create the best possible conditions for effective competition, for example access to address lists and PO boxes.Postal economics, Postal regulation, Telecommunications regulation, Transferability

Regulation and competition in the Turkish telecommunications industry: an update

This chapter provides an overview of the state of liberalization, competition and regulation of major segments of the telecommunications industry in Turkey. It shows that the competitive stance of the regulatory authority and the development of actual competition has been uneven across segments. Specifically, the degree of competition has been higher in the mobile segment relative to fixed telephony or broadband. The chapter also discusses the new Electronic Communications Law and argues that although not perfect, it provides a coherent basis on which the regulatory authority can pursue competitive objectives in a more even manner. However, the actual development of competition will depend a lot on how the law and the ensuing secondary legislation are actually implemented

Prevention of Competition by Competition Law: Evidence from Unbundling Regulation on Fiber-Optic Networks in Japan

This paper finds that a regulation that promotes competition in one market may decrease competition in other related markets. Policy makers in the telecommunication industry currently are facing an important decision about whether to continue unbundling regulations on new optical-fiber lines. I find that unbundling regulation prevents new providers from building optical-fiber networks, by estimating a dynamic entry game with a dataset of fiber-optic network constructions in Japan from 2005 to 2009. In particular, when a new technology is introduced, unbundling regulation has an oligopolization effect on the regulated firms. This finding in the Japanese telecommunications industry suggests that unbundling regulation during periods of new technology diffusion may reduce the price of service but also decrease competition in the infrastructure market.