Whose Regulation, Which Competition?
Edited by Hanns Ullrich
Chapter 9: Regulating Towards What? The Concepts of Competition in Sector-Specific Regulation, the Likelihood of their Realisation and of their Sustainability, and their Relationship to Rendering Public Infrastructure Services
9. Regulating towards what? The concepts of competition in sectorspecific regulation, the likelihood of their realisation and of their sustainability, and their relationship to rendering public infrastructure services Christian Kirchner* I 1 INTRODUCTION Why Sector-Specific Regulation? Sector-specific regulation has long been regarded as a welfare enhancing device in cases of market failure.1 One example of market failure is the socalled natural monopoly, defined as sub-additivity of the cost function over the relevant range of output.2 In these cases, so the argument goes, the efficiency Professor, Dr. Iur., Dr. rer. pol., LL.M. (Harv.), Humbolt Universität, Berlin. S. F. Breyer, Regulation and Its Reform, Cambridge, Mass, 1982, p. 15; D. W. Carlton, J. M. Perloff, Modern industrial organization, 3rd edn, Reading, Mass, 2000, p. 783; A. E. Kahn, The Economics of Regulations: Principles and Institutions, Vol. 1, Economic Principles, New York et al, 1970, p. 11; D. L. Kaserman, J. W. Mayo, Government and business. The economics of antitrust and regulation, Orlando, 1995, pp. 9, 12; R. Richter, E. G. Furubotn, Neue Institutionenökonomik, 3. Aufl., Tübingen, 2004, p. 373; J. G. Sidak, D. F. Spulber, Deregulatory Takings and the Regulatory Contract – The Competitive Transformation of Network Industries in the United States, Cambridge, England, 1998, p. 20. 2 S. V. Berg, J. Tschirhart, Natural Monopoly Regulation – Principles and Practice, Cambridge, England, 1988, p. 51; W. Kerber, ‘Wettbewerbspolitik’, in Bender et al., Vahlens Kompendium der Wirtschaftstheorie und Wirtschaftspolitik, Vol. 2, 8th edn, München, 2003, pp. 297–361, at p. 349;...
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