Economic Advice and Rhetoric

Economic Advice and Rhetoric

Why do Consultants Perform Better than Academic Advisers?

Onno Bouwmeester

This book compares the approaches of consultants and academic advisers and provides an in-depth analysis of their advice argumentation. Both compete on the market for economic advice, with consultants enjoying a larger market share and usually obtaining higher fees. However, academics criticize them for overcharging, shallowness, and quick-and-dirty methods. So, are consultants’ clients misled or even cheated? Not necessarily. The book reveals that academics have drawbacks as well; their arguments are less balanced than those of consultants and their estimates contradict each other more.

Chapter 6: Advice on Liberalization in the Electricity Market

Onno Bouwmeester

Subjects: business and management, management education, organisation studies, strategic management, education, management education, politics and public policy, public policy


The ongoing policy debate in the Netherlands about liberalization of traditionally regulated markets started in the 1980s. It has a European dimension, since liberalization is a condition for integrating the European market for electricity. The claim that market failures always have to be corrected by regulation is contestable, but benefits of deregulation and liberalization are also subject of discussion. Inefficiencies of regulation are obvious, but market failures can be worse. The debate about the electricity market changed after the Dutch electricity Act of 1998, which established more competition in a traditionally strongly regulated market, even though the electricity Act of 1989 had already given the largest consumers freedom of choice. Before 1998 the central issue in the debate was the most appropriate degree of liberalization. After 1998 the debate was more about the effects of the new electricity Act, and about preconditions and additional policies to correct market failures. The Ministry of Economic Affairs has facilitated the debate about deregulation and liberalization since the late 1980s. It has initiated many liberalization projects in regulated markets, such as postal services, public transport and education, and is the main proponent of liberalization in the debate about the electricity market. Through a research program the ministry of Economic Affairs has appointed consultants and academic advisers to consider the effects of liberalization in this market. In this case study consultants and academic advisers have each written three reports for the Ministry of Economic Affairs. Other clients have also sought advice on the issue of...

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