Network Access Pricing and “Light Handed” Regulation: A Comparative Institutional Analysis

Mario Bergara ()
Additional contact information
Mario Bergara: Banco Central del Uruguay

No 1998002, Documentos de trabajo from Banco Central del Uruguay

Abstract: Optimal regulatory framework choice is analyzed for network (unbundled) industries, by developing a comparative institutional analysis of network access price regulation and "light handed" regulation. The former constitutes a more hierarchy-like governance response. The latter represents a more market-like institutional solution to the regulatory problem. While the former is a specific agency-based arrangement (with a higher degree of political influence), the latter is a court-based system. Consequently, the main trade-off between both frameworks reflects the costs and benefits of having efficient political and/or judicial institutions. Price regulation is superior when the regulator's distributional concerns are irrelevant and the degree of the informational asymmetry is lower. A poorly functioning political system and a high welfare cost of raising public funds makes price regulation less attractive. On the other hand, light regulation is more attractive when the potential rents are smaller, the monopolist is more risk averse, the judicial system is more efficient, and the threat of regulator's auditing is more credible. The possibility of private transfers among firms makes price regulation more advantageous, while a higher information asymmetry among firms makes light handed regulation more attractive. The main results are consistent with a plausible interpretation of the drastic deregulatory process in New Zealand.

Pages: 51 pages
Date: 1998
Note: Presentado en las Jornadas Anuales de Economía del BCU, 1998. Doc. 32
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bcu.gub.uy/Estadisticas-e-Indicadores/ ... 20Trabajo/2.1998.pdf First version, 1998 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bku:doctra:1998002

Access Statistics for this paper

More papers in Documentos de trabajo from Banco Central del Uruguay Biblioteca Especializada. Banco Central del Uruguay. Diagonal Fabini 777, Montevideo-Uruguay. CP 11100. Contact information at EDIRC.
Bibliographic data for series maintained by Biblioteca Especializada ().