Utility Regulation and Competition Policy

Utility Regulation and Competition Policy

Edited by Colin Robinson

In this book, the latest volume in the annual series published in association with the London Business School and the Institute of Economic Affairs, some of the main issues in UK and EU utility regulation and competition policy are discussed. Topics examined include the new electricity and gas trading markets, regulating the railways, introducing competition into water, telecoms and Ofcom, opening EU gas and electricity markets, the 1998 Competition Act, EU merger policy and a general review of privatisation and regulation in Britain. Essays by expert commentators are followed in each case by comments from the relevant regulator.

Chapter 5: A Review of Privatization and Regulation Experience in the UK – Irwin M. Stelzer, Chairman’s Comments – Stephen Littlechild

Irwin M. Stelzer

Subjects: economics and finance, competition policy, public finance, public sector economics

Extract

I should like to begin this chapter by declaring an interest, a practice that I understand is at times followed by some members of your Parliament. In addition to my work at the Hudson Institute, and at The Sunday Times, I serve as a consultant to News International, BSkyB, and several energy companies that have a presence in the UK. That the topics of privatization and regulation should be linked is proof that monopoly power cannot be entrusted to private, profitmaximizing corporations.1 (It must be placed under the control of the state, either through direct ownership, or by regulating its exercise. In this chapter I shall argue that regulation is a more efficient means of controlling monopoly power than is state ownership, that introducing competition is superior to both, but that merely chanting, in the manner of the Chicago school, that all monopoly power is transitory, is to elevate hope over experience, or at a minimum to give a very generous definition to the number of years that can be included in the word ‘transitory’.

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