The Regulation of Privatized Monopolies in the United Kingdom

M.E. Beesley and Stephen Littlechild

RAND Journal of Economics, 1989, vol. 20, issue 3, 454-472

Abstract: This article examines the experience in the United Kingdom with the regulation of privatized monopolies. Its conclusions are (1) that there are significant differences between RPI - X (or price-cap) and U.S. rate-of-return regulation, which provides greater scope for bargaining in the former system; (2) that U.K. regulators have taken seriously their duty to promote competition, but that the existing economic literature is of limited help in this task; (3) that price regulation is likely to be more effective where technology is changing slowly and/or where technology is changing rapidly; and (4) that the case for RPI - X price-cap, rather than rate-of-return regulation, is strongest in telecommunications, gas supply, and electricity supply and least strong in gas and electricity transmission grids.

Date: 1989
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