Regulating Dynamic Markets: Progress in Theory and Practice
AbstractA key question facing regulators is how to create an economic environment that encourages appropriate investment and innovation. In this paper we analyze the importance of technological change for both competition and regulation, with a particular focus on the regulation of telecommunications and the Internet. We recommend that dynamic efficiency should be used as the appropriate benchmark for judging the effectiveness of different regulatory approaches. Contrary to conventional wisdom, we find that incentive regulation, such as price caps, is not particularly good at promoting dynamic efficiency. Neither is traditional cost-of-service regulation. As an alternative, we suggested that antitrust, judiciously applied, is likely to be better at promoting dynamic efficiency.
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Bibliographic InfoPaper provided by Regulation2point0 in its series Working paper with number 606.
Date of creation: May 2010
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Web page: http://regulation2point0.org/
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-14 (All new papers)
- NEP-COM-2010-08-14 (Industrial Competition)
- NEP-IND-2010-08-14 (Industrial Organization)
- NEP-REG-2010-08-14 (Regulation)
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