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Economic Regulation: a review of issues


  • D. Parker


This article surveys a range of issues relating to economic regulation. It begins by examining market and state failures which provide the basis for arguments in support of regulation. Concentrating on natural monopolies, the article outlines the main forms of economic regulation, namely rate-of-return or cost-of-service regulation, price-cap regulation, and sliding scale regulation, a hybrid between price-cap and rate-of-return approaches. Reference is made to the broad phases that need to be considered in the evolution of natural monopoly regulation. These are concerned with regulating the incumbent monopoly, promoting and policing the development of competition, and maintaining competition once it has been introduced. The last phase may be better served through the use of effective national competition laws rather than dedicated sector regulation. The article also examines the range of factors that are likely to affect the economic efficiency and effectiveness of regulation. These involve a mixture of economic, political and governance conditions. Copyright 2002 CIRIEC.

Suggested Citation

  • D. Parker, 2002. "Economic Regulation: a review of issues," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 73(4), pages 493-519, December.
  • Handle: RePEc:bla:annpce:v:73:y:2002:i:4:p:493-519

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    References listed on IDEAS

    1. Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," NBER Working Papers 6421, National Bureau of Economic Research, Inc.
    2. Eric Maskin & Jean Tirole, 1999. "Unforeseen Contingencies and Incomplete Contracts," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 83-114.
    3. Hart, Oliver & Moore, John, 1996. "The Governance of Exchanges: Members' Cooperatives versus Outside Ownership," Oxford Review of Economic Policy, Oxford University Press, vol. 12(4), pages 53-69, Winter.
    4. Jonathan Levin, 2002. "A Theory of Partnerships," Theory workshop papers 505798000000000002, UCLA Department of Economics.
    5. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
    6. Schmitz, Patrick W, 2001. "The Hold-up Problem and Incomplete Contracts: A Survey of Recent Topics in Contract Theory," Bulletin of Economic Research, Wiley Blackwell, vol. 53(1), pages 1-17, January.
    7. Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-1320, September.
    8. Michael Kremer, 1997. "Why are Worker Cooperatives So Rare?," NBER Working Papers 6118, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Kirkpatrick, Colin, 2012. "Economic Governance: Improving the Economic and Regulatory Environment for Supporting Private Sector Activity," WIDER Working Paper Series 108, World Institute for Development Economic Research (UNU-WIDER).
    2. Yin-Fang Zhang & David Parker & Colin Kirkpatrick, 2008. "Electricity sector reform in developing countries: an econometric assessment of the effects of privatization, competition and regulation," Journal of Regulatory Economics, Springer, vol. 33(2), pages 159-178, April.
    3. Zhang, Yinfang & Parker, David & Kirkpatrick, Colin, 2005. "Competition, regulation and privatisation of electricity generation in developing countries: does the sequencing of the reforms matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 358-379, May.
    4. Kirkpatrick, Colin & Parker, David & Zhang, Yin-Fang, 2004. "Price and Profit Regulation in Developing and Transition Economies, Methods Used and Problems Faced: A Survey of the Regulators," Centre on Regulation and Competition (CRC) Working papers 30596, University of Manchester, Institute for Development Policy and Management (IDPM).
    5. Jililian, Hossein & Kirkpatrick, Colin & Parker, David, 2003. "Creating the Conditions for International Business Expansion: The Impact of Regulation on Economic Growth in Developing Countries - A Cross-Country Analysis," Development Economics and Public Policy Working Papers 30554, University of Manchester, Institute for Development Policy and Management (IDPM).
    6. Parker, David & Kirkpatrick, Colin & Figueira-Theodorakopoulou, Catarina, 2008. "Infrastructure regulation and poverty reduction in developing countries: A review of the evidence and a research agenda," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 177-188, May.
    7. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 513-541.
    8. Ananya Reed & Darryl Reed, 2009. "Partnerships for Development: Four Models of Business Involvement," Journal of Business Ethics, Springer, vol. 90(1), pages 3-37, May.
    9. repec:eee:enepol:v:110:y:2017:i:c:p:490-499 is not listed on IDEAS
    10. Tyrone M. Carlin & Cuong Duc Pham, 2009. "From Public To Private: Evidence From a Transitional Economy Setting," Australian Accounting Review, CPA Australia, vol. 19(3), pages 207-216, September.
    11. Matthias Finger & Rolf W. Künneke (ed.), 2011. "International Handbook of Network Industries," Books, Edward Elgar Publishing, number 12961.
    12. Jalilian, Hossein & Kirkpatrick, Colin & Parker, David, 2007. "The Impact of Regulation on Economic Growth in Developing Countries: A Cross-Country Analysis," World Development, Elsevier, vol. 35(1), pages 87-103, January.
    13. Catarina Figueira & David Parker, 2011. "Infrastructure Liberalization: Challenges to the New Economic Paradigm in the Context of Developing Countries," Chapters,in: International Handbook of Network Industries, chapter 27 Edward Elgar Publishing.
    14. Dassler, Thoralf, 2006. "Combining theories of regulation - Proposing a framework for analysing regulatory systems worldwide," Utilities Policy, Elsevier, vol. 14(1), pages 31-43, March.
    15. Kirkpatrick, Colin & Parker, David, 2003. "Regulatory Impact Assessment: Developing Its Potential for Use in Developing Countries," Centre on Regulation and Competition (CRC) Working papers 30646, University of Manchester, Institute for Development Policy and Management (IDPM).
    16. Yin-Fang Zhang & David Parker & Colin Kirkpatrick, 2005. "Assessing the Effects of Privatisation, Competition and Regulation on Economic Performance : The Case of Electricity Sector Reform," Development Economics Working Papers 22589, East Asian Bureau of Economic Research.
    17. David Parker, 2004. "The UK's Privatisation Experiment: The Passage of Time Permits a Sober Assessment," CESifo Working Paper Series 1126, CESifo Group Munich.
    18. Cambini, Carlo & Franzi, Donata, 2013. "Independent regulatory agencies and rules harmonization for the electricity sector and renewables in the Mediterranean region," Energy Policy, Elsevier, vol. 60(C), pages 179-191.
    19. Robert L. Earle & Karl Schmedders & Tymon Tatur, 2002. "Price Caps and Uncertain Demands," Discussion Papers 1340, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    20. Çetin, Tamer & Yasin Eryigit, Kadir, 2013. "The economic effects of government regulation: Evidence from the New York taxicab market," Transport Policy, Elsevier, vol. 25(C), pages 169-177.

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