Strategic Behaviour in Network Industries
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Strategic Behaviour in Network Industries A Multidisciplinary Approach

A Multidisciplinary Approach

Ernst ten Heuvelhof, Martin de Jong, Mirjam Kars and Helen Stout

This in-depth book explains how institutional changes such as the privatization and liberalization of network industries, for example transport, energy or telecommunications, can frequently be disappointing. The expected benefits such as lower prices, innovation and better services fail to materialize, often because the number of competitors is low. The authors demonstrate how strategic actor behaviour of one or more of the firms involved can help explain these disappointing results.
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Chapter 4: Recent Trends in Infrastructure-based Sectors

Ernst ten Heuvelhof, Martin de Jong, Mirjam Kars and Helen Stout

Extract

4. Recent trends in infrastructurebased sectors After the generic reflections in the preceding chapters about strategic behaviour in general, we will zoom in on the network-based industries in this chapter. We will do so by first setting out the characteristic features of network-based industries. We will focus on the features that present an opportunity for, or give rise to, strategic behaviour. We will then describe the change processes that manifest themselves in these sectors, again in so far as they are related to strategic behaviour. 4.1 CHARACTERISTICS OF NETWORK-BASED INDUSTRIES Network-based industries are not ordinary industries. They are special. The core of this special status lies in the great and often irreplaceable importance of utility services for the well-being of citizens and for the functioning of the economy and in the fact that an infrastructure or network forms part of the production chain. In more detail, the following characteristics are typical of network-based industries: ● ● Many utility services facilitate other economic activities. Many of them are even necessary for conducting other economic activities. A reliable energy supply is indispensable for industrial activities; a good transport infrastructure is a necessary condition for trading activities. In other words, network-based industries have positive external effects on the economy as a whole. Strategic behaviour that would endanger the functioning of these industries poses a threat to the economy as a whole. Utility services are essential for running a comfortable and hygienically responsible household. Clean drinking water, telephony, television and a sewer connection form part of...

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