Regulating Infrastructure: Monopoly, Contracts, and Discretion

By Jose A Gomez Ibanez, Jose A Gomez Ibanez

In the 1980s and '90s many countries turned to the private sector to provide infrastructure and utilities, such as gas, telephones, and highways--with the idea that market-based incentives would control costs and improve the quality of essential services. But subsequent debacles including the collapse of California's wholesale electricity market and the bankruptcy of Britain's largest railroad company have raised troubling questions about privatization. This book addresses one of the most vexing of these: how can government fairly and effectively regulate "natural monopolies"--those infrastructure and utility services whose technologies make competition impractical?

Rather than sticking to economics, JosE GOmez-IbANez draws on history, politics, and a wealth of examples to provide a road map for various approaches to regulation. He makes a strong case for favoring market-oriented and contractual approaches--including private contracts between infrastructure providers and customers as well as concession contracts with the government acting as an intermediary--over those that grant government regulators substantial discretion. Contracts can provide stronger protection for infrastructure customers and suppliers--and greater opportunities to tailor services to their mutual advantage. In some cases, however, the requirements of the firms and their customers are too unpredictable for contracts to work, and alternative schemes may be needed.

Gsmez-Ibaqez uses a rich set of case studies to analyse how and why...different institutional designs are chosen and reformed. The author's range is exceptionally wide: Sri Lanka, the U.S., Britain and Argentina; he tackles telecommunications, railroads, airlines, electricity, buses and water; and spans time periods from the 1950s to today. The result is a remarkable array of examples, information and analyses. In explaining institutional design, he offers a series of fascinating arguments using opportunism and transaction-cost analysis as a starting point rather than as a constraining simplifying theme. -- Mark Thatcher "Times Higher Education Supplement" (06/11/2004)


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About the Paperback

Publisher Harvard University Press
Publish date 09/01/2006
Pages 431
ISBN-13 9780674022386
ISBN-10 0674022386
Language English