The State and Prospects of Regulation: A Long Term Perspective on Italy and Beyond

Nicola Matteucci

L'industria, 2020, issue 3, 479-508

Abstract: Adopting a long term perspective helps to evaluate the rationale, outcomes, and dilemmasof the regulation evolution and its reforms. After having been ignited by market liberalisationsand privatisations of the 1980s and 1990s, regulation reforms impacted on utilities differently.Some sectors (like telecoms) appear to have reaped the highest benefits from incentive-basedregulation; others (such as electricity), for a variety of reasons, did not completely abandonrate-of-return (ror) or featured hybrid tools. While the price cap stands as the regulatorychampion, its many variants prevent sound experimental assessments; moreover, so far it hasnot been able to entirely solve quality underinvestment. Consequently, a new generation ofoutput-based regulation is being developed: it encompasses a wider menu of policy targets.Telecoms, which remain the front-runner of future trends, experiment new regulatory modelsfor stimulating infrastructure-based competition, and guaranteeing universal service. Furthermore,the role of privatisations remains contentious and appears generally overstated. Theregulatory agenda is now concerned with the solution of Government failures, and the harmonisationbetween regulation and industrial policy. The resurgence of the latter in the eu isunveiled by a «vibrant» State aid policy, that targets sectors (utilities) that are nodes of systemicinterdependence. At the same time, telecoms markets uncover original policy dilemmasat the intersection of antitrust and regulation. While industrial eras and regulatory paradigmsseem to chase one another, new insights on how to better regulate monopolistic markets comefrom «nudges» and behavioural theories of regulation. Concerning the research agenda, casesof «regulatory exuberance» may warrant scrutiny, while a deeper investigation of the limits ofindependent authorities is needed.

Keywords: Incentive-based regulation; Antitrust; Governance; Industrial policy; Italy (search for similar items in EconPapers)
Date: 2020
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