Reorganization and Regulation of Network Industries

Author: Newbery
Publisher:
Publication Date: 2002-09-25
Features: Network-based companies, such as electricity, telephone, and gas, are public infrastructure industries that require fixed networks to transmit services. Due to the lack of alternative networks, consumers face the risk of exploitation by network owners. However, the funds for networks are sunk, and once invested, the bargaining advantage shifts from investors to consumers. Out of fear of profit expropriation, investors may be unwilling to invest. The tension between consumers and investors can be mitigated through nationalization. Additionally, the relationship between private ownership and the political power of consumers can be balanced through regulation. In summary, network-based public utilities operate under the constraints set by the government. Network-based public utilities, such as electricity, telephone, and gas, are public infrastructure industries that require fixed networks to provide services and operate under the constraints set by the government, thereby raising special issues of ownership and regulation. The author of this book integrates theories from industrial economics, regulatory economics, and comparative institutional economics, using the insightful and perceptive lens of an applied economist, to evaluate the importance of structural reforms through a comprehensive examination of numerous rich and detailed cases of regulatory relaxation, liberalization, and privatization of network-based public utilities. The book analyzes the natural complementary relationship between privatization and liberalization. The style of the book is rigorous, and the arguments are well-supported. It is suitable for college students majoring in economics and management, public utility managers, business operators, and researchers in the fields of economics and management.