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Regulatory reform in telecommunications in Central and Eastern Europe

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  • Mark Armstrong
  • John Vickers

Abstract

In this paper we discuss public policy towards the telecommunications sector in Central and Eastern Europe (CEE), focusing primarily on the need to ensure adequate capital investment. The analysis falls into two main parts: the regulation of monopoly, and policy on liberalization. Concerning regulation, we discuss how policy credibility is likely to be a problem in the region, and how reputational considerations, the design of regulatory institutions, and methods of price control can help to ameliorate this problem. Concerning liberalization, we consider the effects of potential competition on investment incentives, and construct a simple model to analyse the different effects of liberalization and regulatory risk on investment. Some preliminary policy conclusions are drawn, and we argue that in the CEE region - in contrast to more well developed countries - a reasonable case can be made for allowing a temporary period of monopoly for basic services. Copyright 1996 The European Bank for Reconstruction and Development.

Suggested Citation

  • Mark Armstrong & John Vickers, 1996. "Regulatory reform in telecommunications in Central and Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 295-318, October.
  • Handle: RePEc:bla:etrans:v:4:y:1996:i:2:p:295-318
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0351.1996.tb00174.x
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    3. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, January.
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    Cited by:

    1. Roland Strausz, 2009. "The Political Economy of Regulatory Risk," SFB 649 Discussion Papers SFB649DP2009-040, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Brito Duarte & Pereira Pedro & Vareda João, 2013. "Investment, Dynamic Consistency and the Sectoral Regulator’s Objective," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 563-594, August.
    3. Sutherland, Ewan, 2013. "Independence and the regulatory state—Telecommunications in Scotland and the rest of the United Kingdom," Telecommunications Policy, Elsevier, vol. 37(11), pages 1046-1059.
    4. Christian von Hirschhausen & Petra Opitz, 2001. "Power Utility Re-regulation in East European and CIS Transformation Countries (1990-1999): An Institutional Interpretation," Discussion Papers of DIW Berlin 246, DIW Berlin, German Institute for Economic Research.
    5. Boris Dodonov & Christian Von Hirschhausen & Petra Opitz & Pavlo Sugolov, 2002. "Efficient Infrastructure Supply for Economic Development in Transition Countries: The Case of Ukraine," Post-Communist Economies, Taylor & Francis Journals, vol. 14(2), pages 149-167.
    6. Evans, Joanne & Levine, Paul & Trillas, Francesc, 2008. "Lobbies, delegation and the under-investment problem in regulation," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 17-40, January.
    7. Russell Pittman, 2001. "Vertical Restructuring of the Infrastructure Sectors of Transition Economies," Industrial Organization 0111002, EconWPA.
    8. Cowhey, Peter & Klimenko, Mikhail M., 2001. "The WTO agreement and telecommunications policy reform," Policy Research Working Paper Series 2601, The World Bank.
    9. von Hirschhausen, Christian R. & Opitz, Petra, 2001. "Power utility re-regulation in East European and CIS transformation countries (1990 - 1999): An institutional interpretation," Discussion Papers 2001/7, Technische Universität Berlin, School of Economics and Management.
    10. Morris Bornstein, 1999. "Framework Issues in the Privatisation Strategies of the Czech Republic, Hungary and Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 11(1), pages 47-77.

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