The Governance of Network Industries

The Governance of Network Industries

Institutions, Technology and Policy in Reregulated Infrastructures

Studies in Evolutionary Political Economy series

Edited by Rolf W. Kunneke, John Groenewegen and Jean-François Auger

Infrastructures are subject to substantial readjustments of governance structures, often labeled as liberalization, privatization or re-regulation. This affects all traditional infrastructure sectors including communications, energy, transport and water. This study highlights and illustrates some of the major challenges for readjusting the governance of network industries from an economic, institutional, political and technological perspective. The three parts of the book address the institutional design of infrastructures, the role of technology in different sectors and actor behaviour.

Chapter 5: Regulatory Practices and the Role of Technology in the Network Industries: The Case of Europe

Matthias Finger and Frédéric Varone

Subjects: economics and finance, industrial economics, institutional economics, public sector economics

Extract

5. Regulatory practices and the role of technology in network industries: the case of Europe Matthias Finger and Frédéric Varone The purpose of this chapter is to identify the key characteristics of the emerging modes of governing European network industries. With Giandomenico Majone (1990, 1996), we make the case that a European model of network industry regulation has developed since the liberalization of the telecommunications industry. Yet we go further than Majone by explicitly taking into account the technical systems underlying both liberalization and regulation of network industries. At present regulatory practices in Europe cover both the functions of regulation (that is, the different aspects that are being regulated: competition, market creation, and technical and political aspects) and the institutions of regulation, generally a more or less independent regulatory agency. However these practices—and their underlying model—appear to be increasingly at odds with the technical and systemic evolution of the network industries. Thus we argue that the future European model of network industry regulation will have to evolve by taking better into account the technical nature of network industries, as this will better reflect the coevolution between the technical systems, on the one hand, and their institutional governance, on the other. As we have argued elsewhere (Finger and Varone 2006), ‘bringing technical system back in’ will pose substantial challenges to the current practices and underlying model of network industry regulation in Europe. Therefore, we suggest that at least three diverging policy options or scenarios are thinkable in...

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