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Regulating telecommunications in developing countries : outcomes, incentives, and commitment

  • Galal, Ahmed
  • Nauriyal, Bharat
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    In response to the recent wave ofprivatizing and regulating monopolies in developing countries, the authors evaluate the impact of different regulatory schemes on private sector behavior in the telecommunications sector in seven countries. They find that regulation is most effective - meaning, it results in substantial investment by the private sector, reasonable returns on this investment, and greater productivity - where the government/regulators reduce the firm's information advantage, induce the firm (through pricing) to operate efficiently, and institute safeguarding mechanisms to protect the firm against expropriation of assets or quasi-rents. Conversely, where the government/regulators fail to resolve information, incentive, and commitment problems, private sector returns are relatively high, and investment and productivity are relatively low.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1520.

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    Date of creation: 31 Oct 1995
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    Handle: RePEc:wbk:wbrwps:1520
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    1. Bernard Caillaud & Patrick Rey & Roger Guesnerie & Jean Tirole, 1987. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," Working papers 472, Massachusetts Institute of Technology (MIT), Department of Economics.
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    10. Esfahani, Hadi Salehi & DEC, 1994. "Regulations, institutions, and economic performance : the political economy of the Philippines'telecommunications sector," Policy Research Working Paper Series 1294, The World Bank.
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    13. Hill, Alice & Abdala, Manuel Angel & DEC, 1993. "Regulation, institutions, and commitment : privatization and regulation in the Argentine telecommunications sector," Policy Research Working Paper Series 1216, The World Bank.
    14. Oliver Hart & Bengt Holmstrom, 1986. "The Theory of Contracts," Working papers 418, Massachusetts Institute of Technology (MIT), Department of Economics.
    15. Richard Schmalensee, 1989. "Good Regulatory Regimes," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 417-436, Autumn.
    16. Spiller, Pablo T. & Sampson, Cezley I., 1993. "Regulation, institutions and commitment : the Jamaican telecommunications sector," Policy Research Working Paper Series 1362, The World Bank.
    17. David P. Baron, 1988. "Regulation and Legislative Choice," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 467-477, Autumn.
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