Can Competition Replace Regulation for Small Utility Customers?
AbstractMany utility markets are now being opened to competition, and some regulators have expressed the hope that this will make the regulation of consumer prices unnecessary. In this paper, entrants offer (differentiated) 'added value', but consumers incur a switching cost if they buy from one of them. The incumbent's profit-maximising price may be well above the level of its costs. This is likely to be the case in the UK's energy industries, but competition may be able to replace regulation in telecommunications, where marginal costs are lower, demand elasticity higher, and entrants can give more 'added value'.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2406.
Date of creation: Mar 2000
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- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
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