Regulatory Governance Costs in Network Industries: Implicatins for postal Regulation

The various actors in regulated industries relate to each other within a broader institutional framework, i.e. by way of formal and informal rules. An important role in the implementation of liberalization processes is given to the regulation and thus to regulatory institutions. Regulation should have positive effect on social welfare. But state intervention also causes costs which we call costs of regulatory governance. These costs result from negative consequences caused by unnecessary regulatory requirements or from the implementation of inappropriate regulatory instruments. According to new institutional economics, these costs will depend upon the formal and informal rules among the involved actors, upon the allocation of property rights among these actors, as well as upon the various principal-agent or more generally contractual relationships among these actors. In this article we define an analytical framework of costs of regulatory governance. We distinguish between direct and indirect costs of regulation: Direct costs occur in relation with the institutional design of the regulatory framework and the behavior of actors. Whereas the indirect costs arise because of false incentives and finally turn out in an inefficient supply of goods and services. Using the example of the Swiss postal market we give an outline of a possible application of the framework.Regulation; Postal Sector; Regulatory Governance Costs; New Institutional Economics

Postal Markets and Electronic Substitution: Implications for Regulatory Practices and Institutions in Europe

There is an increasing convergence between postal products and telecom applications which suggests the need for a co-evolution of regulation. But there is hardly any discussion in academia or in practice about the consequences for regulation. Relevant questions are: Which parts of current regulation will become redundant? Is there additional regulation needed due to new bottlenecks or changes in consumer behavior? In our qualitative analysis, we investigate the implications of intermodal competition and growing convergence between postal and telecommunications services on regulatory institutions and regimes. We set up a comparison between the networks and compare the scope of universal services and issues concerning market power regulation in the two different industries.Convergence, Regulation, Post, Telecommunication, Universal service obligation, Access

Regulatory Institutions and Governance Costs:The Case of the Postal Sector

In recent decades, the European postal industry has undergone profound reforms, which aim to promote competition while simultaneously maintaining a high level of universal services for consumers. It is often put forth that market opening and the emergence of competition will foster innovation in the postal sector. Indeed, increased direct competition with new market entrants and indirect competition with information technologies in the sector represent great challenges to the traditional business model of postal operators. In order to allow postal operators to cope with these challenges, regulatory institutions need to evolve coherently with developments in the market place and the society. One of the findings of this thesis is that in many cases, current regulatory institutions do not respond adequately and in a timely manner to changes in consumer preferences or technologies. The actual development in the British postal sector clearly demonstrates how the regulatory regime failed to adapt early enough and how the delay in the adaption of the regulatory institutions influenced the development of competition as well as the structure of the market. The main theoretical contribution of this thesis is the development of a framework of regulatory governance costs. The framework contains three different types of costs: staticdirect costs, static-indirect costs and dynamic costs. The static-direct costs of regulatory governance refer to the interaction and transactions between the involved actors in the short term, and only marginally concern the overall market. These costs are: - Monitoring Costs which arise on the regulatory institution’s side because of informational asymmetry in the relationships of principals with their agents. - Compliance Costs which are the costs that the industry faces in order to comply with regulatory requirements. - Coordination Costs which result from the fact that multiple actors are involved in regulation, which in turn have to be coordinated. The second type of regulatory governance costs, the static-indirect costs, pertains less to the individual actors than to the overall market. In addition to reducing security on investment in the short term, static-indirect regulatory governance costs are the costs related to: - Quantities and Prices: Actions of regulators (or policy makers) that have effects on the regulated industries and the consumers in terms of supply, demand the development of prices. - Capacity and Technology Choice: Regulation may prevent the regulated operators from aligning their supply with the effective demand and affect production technology. The third type of costs, the dynamic costs of regulatory governance, results in an inefficient level of product and process innovation. These costs occur mainly in combination with regulatory uncertainty ending in legal disputes or too rigid regulatory regimes that hinder the developments of markets. The dynamic costs reduce investment security in the long-term and encompass a more dynamic perspective than the static costs. The costs concern: - Product Innovation: regulation may prevent operators from introducing new products/services because excessive investment cost or limited gains from investment. It may also or result in a delay of time to market. - Process Innovation: regulation may result in suboptimal processes and prevent operators from optimizing existing processes or introduce process innovations. In summary, our approach to the appreciation of regulatory governance costs contributes to a better understanding of the consequences of regulation and the role of regulation regarding the development of markets. The insights about the costs and their impact on market evolution will be useful to analyze in the development of regulatory policies in the postal sector as well as in the network industries. The framework of regulatory governance costs is applied in three case studies in the postal market (Switzerland, Germany, Great Britain). The analysis of the cases provides insights into the impact of different institutional dimensions of the governance costs and the need for action in adapting current regulation. As a result, a set of policy recommendations is formulated in the conclusion

Coûts de la régulation des industries de réseau: enseignements du réseau postal

Notre approche des coûts de la régulation est une contribution à une meilleure compréhension des conséquences de la régulation, ainsi que du rôle et de l’influence des autorités de régulation sur les industries de réseaux. Selon nous, la comparaison des coûts de régulation directs et indirects sur divers marchés postaux peut aider à déterminer comment concevoir les institutions et les conditions-cadres de régulation pour à la fois promouvoir la concurrence et satisfaire aux objectifs du service public.Cost of regulation, Postal network

Regulatory Risk and Uncertainty in British Postal Regulation - A Governance Perspective

In this paper we focus on risk and uncertainty caused by the (1) discretionary behavior of regulatory bodies and (2) the instruments and mechanisms implemented to regulate public services in general and the postal sector in particular. In previous articles we developed an analytical framework for the assessment of direct and indirect regulatory governance costs in regulated industries. In the present paper we aim to further develop the construct of indirect costs of regulatory governance with respect to regulatory risks and uncertainty. The topic gains increasing importance in the debate on current regulatory reforms. Regulatory risks may occur on different levels of regulatory activities. To analyze where possible indirect costs of risk and uncertainty could occur we investigate a case study in the UK postal market. In postal markets these types of costs occur mainly with regard to universal service obligations, licensing regimes, access regulation, price control, structural market entry barriers and adaptations of regulatory regimes

Regulatory Governance Costs in Network Industries: Implicatins for postal Regulation

The various actors in regulated industries relate to each other within a broader institutional framework, i.e. by way of formal and informal rules. An important role in the implementation of liberalization processes is given to the regulation and thus to regulatory institutions. Regulation should have positive effect on social welfare. But state intervention also causes costs which we call costs of regulatory governance. These costs result from negative consequences caused by unnecessary regulatory requirements or from the implementation of inappropriate regulatory instruments. According to new institutional economics, these costs will depend upon the formal and informal rules among the involved actors, upon the allocation of property rights among these actors, as well as upon the various principal-agent or more generally contractual relationships among these actors. In this article we define an analytical framework of costs of regulatory governance. We distinguish between direct and indirect costs of regulation: Direct costs occur in relation with the institutional design of the regulatory framework and the behavior of actors. Whereas the indirect costs arise because of false incentives and finally turn out in an inefficient supply of goods and services. Using the example of the Swiss postal market we give an outline of a possible application of the framework

Regulatory Governance Costs in Network Industries: Implicatins for postal Regulation

The various actors in regulated industries relate to each other within a broader institutional framework, i.e. by way of formal and informal rules. An important role in the implementation of liberalization processes is given to the regulation and thus to regulatory institutions. Regulation should have positive effect on social welfare. But state intervention also causes costs which we call costs of regulatory governance. These costs result from negative consequences caused by unnecessary regulatory requirements or from the implementation of inappropriate regulatory instruments. According to new institutional economics, these costs will depend upon the formal and informal rules among the involved actors, upon the allocation of property rights among these actors, as well as upon the various principal-agent or more generally contractual relationships among these actors. In this article we define an analytical framework of costs of regulatory governance. We distinguish between direct and indirect costs of regulation: Direct costs occur in relation with the institutional design of the regulatory framework and the behavior of actors. Whereas the indirect costs arise because of false incentives and finally turn out in an inefficient supply of goods and services. Using the example of the Swiss postal market we give an outline of a possible application of the framework

Regulatory Institutions and Governance Costs in the Postal Sector: The Case of Switzerland

Currently there is a strong trend toward sector-specific regulatory authorities across sectors and countries. However, liberalization has not led to a common European regulatory model. The circumstance that different old and new regulatory authorities exist in parallel not only raises agency problems, but also requires a horizontal coordination among the different authorities and their competences. The regulatory regimes differ in the degree to which regulatory authorities are upwardly accountable to governments, horizontally active alongside or related to courts and regulators, or downwardly responsible for operators and interest groups. Based on Williamson (1996, 2005) as well as on Spiller and Tommasi (2005) we try to develop conceptual foundations about the definition and identification of governance costs in regulatory regimes. Following our theoretical findings we explore the Swiss postal regulatory regime and its institutional framework. Our focus is on the identification of the institutional design and the drivers of governance costs in the specific setting of Switzerland