Privatization, Regulation and Deregulation

✍ Scribed by Michael Beesley

• Publisher: Routledge
• Year: 1997
• Tongue: English
• Leaves: 508
• Edition: 2
• Category: Library

✦ Synopsis

In this second edition of Privatization, Regulation and Deregulation, the author has updated and augmented the original material to take account of developments over the last 5 years. This volume includes ten completely new chapters and coverage of the critical period from 1981to the present. The book provides a unique insight into the privatization and regulatory procedure. In addition, it presents a significant contribution to the basic economic arguments underlying these reforms to practitioners involved in privatization and regulation.

✦ Table of Contents

Book Cover......Page 1
Half-Title......Page 2
Title......Page 3
Copyright......Page 4
Dedication......Page 5
Contents......Page 6
Figures......Page 8
Tables......Page 9
Acknowledgements......Page 11
General note......Page 12
FORMATIVE INFLUENCES......Page 13
THE CONTEXT OF THE ESSAYS......Page 25
POSTSCRIPT: FIVE YEARS LATER......Page 33
NOTE......Page 36
CRITERIA FOR PRIVATIZATION......Page 37
BENEFITS AND COSTS......Page 39
COMPETITION......Page 40
REGULATION AND COMPETITION POLICY......Page 41
NON-COMMERCIAL OBLIGATIONS......Page 42
PRIORITIES......Page 44
Quadrant D......Page 46
Quadrant C......Page 47
Quadrant A......Page 48
Quadrant B......Page 49
CONCLUSIONS......Page 51
BIBLIOGRAPHY......Page 52
INTRODUCTION......Page 54
HOW SHOULD ANALYSTS REGARD PRIVATIZATION?......Page 55
EXPECTATIONS ABOUT PRIVATIZATION......Page 57
IS THERE A PRIVATE MONOPOLY POWER PROBLEM?......Page 59
THE TRANSFER OF GOVERNMENT RIGHTS......Page 62
FUTURE PRIVATIZATION? THE MISSING CANDIDATES......Page 65
NOTES......Page 67
INTRODUCTION......Page 68
PRICE CONTROL......Page 69
Rate of return versus RPI—X......Page 70
Setting and resetting X......Page 71
Setting X for Manchester Airport......Page 73
Setting and resetting X for British Telecom......Page 75
Incentives and efficiency......Page 76
Price flexibility......Page 78
Cost pass-through......Page 79
Tariff basket versus revenue yield......Page 80
THE PROMOTION OF COMPETITION......Page 81
An illustration from telecommunications......Page 82
An illustration from gas......Page 83
Economic analysis of new entry......Page 84
REGULATORY EFFECTIVENESS......Page 86
An illustration from the United Kingdom......Page 88
RPI—X versus rate of return revisited......Page 89
NOTES......Page 90
REFERENCES......Page 91
MANAGEMENT RIVALRY AND REGULATION......Page 94
Obstacles to be avoided......Page 95
WATER MERGER POLICY......Page 96
CONSEQUENTIAL QUESTIONS......Page 99
GROUNDS FOR FURTHER TAKEOVER RULES......Page 101
NOTE......Page 102
6 The required rate of return/cost of capital......Page 103
NOTE......Page 108
TIMING OF REVIEWS......Page 109
INFORMATION FLOWS......Page 111
THE AMBITION VERSUS THE STARTING POINT......Page 113
NEW INFORMATION NEEDS......Page 114
SUMMARY......Page 116
NOTES......Page 117
INTRODUCTION......Page 119
GROWTH OF THE TAXI TRADE IN LONDON......Page 120
TAXI AND HIRE CAR COMPETITION......Page 128
SUPPLY SIDE DEVELOPMENTS......Page 130
Input prices and their importance......Page 131
Productivity changes......Page 141
Innovations and productivity......Page 143
CONCLUSIONS......Page 148
NOTES......Page 149
REFERENCES......Page 151
9 Information for regulating......Page 153
Variation of fare with free entry to the trade......Page 156
Predictions of the impact of a fare reduction with free entry......Page 158
Inference from experience......Page 162
Limitation of the number of cabs......Page 163
The effect of a change in fare on profitability......Page 164
The effect of a change in permitted numbers on profitability......Page 165
Inferences from licence values and engaged ratio......Page 166
OPTIMAL INTERVENTION......Page 167
Regulation when time values are uniform......Page 168
CONCLUSION......Page 171
APPENDIX: CONSTRUCTION OF FIGURE 9.1......Page 172
NOTES......Page 175
REFERENCES......Page 178
INTRODUCTION......Page 180
IMPACTS ON COSTS AND PRODUCTIVITY......Page 181
SERVICE PROVISION......Page 182
IMPACTS ON DISTRIBUTION OF INCOMES AND EXTERNAL INTERESTS......Page 184
INNOVATION AND DEREGULATION......Page 185
IMPACTS ON ORGANIZATIONS......Page 187
TRANSITIONAL PROBLEMS AND COLLATERAL POLICIES......Page 188
IS THERE A VIABLE COMPROMISE?......Page 189
NOTES......Page 190
UK COMPETITION AUTHORITIES AND THE BUS INDUSTRY......Page 192
ANALYSIS TO UNDERPIN PRO-COMPETITIVE ACTION......Page 194
CONTRASTS WITH PREVIOUS ANALYSIS......Page 198
WHAT EVIDENCE SHOULD BE LOOKED FOR?......Page 199
OFT AND MMC ANALYSIS......Page 202
CONCLUSIONS......Page 205
NOTES......Page 207
REFERENCES......Page 208
INTRODUCTION......Page 209
Credible threats to deter......Page 210
When all threats are empty......Page 211
Incumbent rights are marketable......Page 212
Generation and protection of profit......Page 214
THE ENTRY OF LONDON EXPRESS AVIATION (‘LEX’)......Page 215
Hopes and fears......Page 216
Equity funds needed......Page 217
Costs of LEX and of a competitor......Page 218
Experienced venturers......Page 219
The scale of ‘committed’ costs......Page 220
LEX’S ‘COMMITTED COSTS’ AND ENTRY CONDITIONS......Page 221
Defences against competition......Page 222
COMMITTED COSTS, EMPIRICAL WORK, AND REGULATION......Page 224
One-sided disclosure forced by regulation......Page 225
NOTES......Page 226
REFERENCES......Page 227
INTRODUCTION......Page 228
The regime between 1953 and 1968......Page 230
The effects of 1968 deregulation......Page 233
Contractual and organizational change......Page 235
BUS DEREGULATION OF LONG-DISTANCE OPERATIONS......Page 239
The nationalized industry period......Page 240
The post-privatization period......Page 243
The 1985 Act......Page 244
Contrasting expectations about deregulation......Page 245
Reported results......Page 247
The relevant policy changes......Page 250
Effects on entry......Page 253
Subsidy and other entry barriers......Page 255
CONCLUSIONS......Page 257
Anti-trust issues......Page 258
NOTES......Page 260
INTRODUCTION......Page 263
BACKGROUND......Page 264
CURRENT POSITIONS ON RESALE......Page 270
LOSS OF BT REVENUE AND PROFIT......Page 273
FURTHER IMPLICATIONS OF RESALE......Page 286
LONGER-TERM ISSUES......Page 292
SUMMARY OF CONCLUSIONS......Page 297
APPENDIX 1: PRICE ELASTICITIES OF DEMAND FOR TELEPHONE CALLS......Page 298
APPENDIX 2: NATURAL MONOPOLY AND ECONOMIES OF SCALE IN TELECOMMUNICATIONS......Page 301
NOTES......Page 307
The importance of interconnection......Page 311
The background to the determination......Page 313
Scope of the determination......Page 315
The form interconnection will take......Page 316
Case 1: Customers directly connected to BT......Page 320
Case 2: Subscribers to both networks......Page 321
Forms of interconnection excluded from the determination......Page 322
Charges for interconnection......Page 323
Payments for interconnected calls......Page 324
BT’s strategy vis-a-vis Mercury......Page 328
The determination and BT/Mercury competition......Page 329
Charges and margins for competition......Page 331
New market entrants......Page 337
NOTES......Page 338
STATE OF THE TELECOMMUNICATIONS MARKET IN 1981......Page 340
System X......Page 341
Equipment standards......Page 342
Network competition......Page 343
BT as a nationalized industry......Page 344
PRIVATIZATION......Page 345
Divestiture......Page 346
Mercury......Page 347
OFTEL......Page 348
Price control......Page 349
Network competition in the Duopoly era......Page 351
International satellite services......Page 352
THE DUOPOLY REVIEW......Page 353
Private networks and resale......Page 354
Interconnection......Page 355
Rebalancing and price controls......Page 356
Cable-based telephony......Page 357
Numbering......Page 358
BT/Mercury Competition......Page 359
THE REGULATORY PROCESS......Page 360
Encouraging local entry......Page 361
Radio applications......Page 362
Oftel and licensing powers......Page 363
NOTES......Page 364
PRICE CONTROL AND PROMOTING COMPETITION......Page 366
PRICING IN WATER......Page 369
PRICING GAS......Page 371
TELECOMS: AFTER THE DUOPOLY WHITE PAPER......Page 374
REFERENCES......Page 379
INTRODUCTION......Page 380
Contestable and non-contestable separation......Page 381
Assessing allowed total revenues......Page 382
Deriving the ‘control total’ of outlays......Page 383
DERIVING THE PREFERRED PRICE STRUCTURE......Page 385
DEALING WITH THE MARK-UPS......Page 391
PROGRESS TOWARDS ADOPTION IN THE UK......Page 393
COMPETITIVE CONDUCT RULES......Page 394
ASSET VALUATION ISSUES......Page 396
Ring-fencing standards......Page 399
Deriving the preferred price structure......Page 401
The role of activity-based costing......Page 402
NOTES......Page 403
THE INHERITANCE......Page 404
THE FORWARD-LOOKING EXPENDITURE APPROACH......Page 407
PRICE CONTROL FOR TRANSCO AND THE 1993 MMC REPORT......Page 410
REVISING RPI—X......Page 413
SUMMARY AND CONCLUSION......Page 415
NOTES......Page 416
THREE SOURCES OF CONCERN......Page 418
EMPIRICAL EVIDENCE......Page 419
INNOVATION AND FIRM SIZE......Page 420
INTUITIVE ARGUMENTS......Page 421
CASE-BY-CASE APPROACH......Page 422
CONCENTRATION ON POST-MERGER ACTIVITIES......Page 423
NOTES......Page 424
WHAT IS THE PROBLEM TO BE TACKLED?......Page 425
THE GREEN PAPER’S CONCERNS......Page 426
AFTER THE GREEN PAPER......Page 428
THE GREEN PAPER’S VERDICT......Page 430
COMPLEMENTING THE GREEN PAPER’S ANALYSIS......Page 431
A PROGRAMME FOR REFORM......Page 433
PENALTIES AND COMPENSATION......Page 435
CONCLUSION......Page 437
NOTES......Page 438
INTRODUCTION......Page 439
New ideas: the incentives......Page 441
Producers of formats and transmission......Page 443
Developments in spectrum use......Page 444
Importance of optical fibre......Page 445
Receptors......Page 447
ARE INCUMBENTS A PROBLEM?......Page 448
UK competition law mechanisms......Page 450
The newspaper experience......Page 451
UK competition law practice......Page 452
THE BBC AND MEDIA CONCENTRATION......Page 453
FUTURE PUBLIC POLICY TOWARDS THE BBC......Page 454
BBC’s ‘Morrisonian view of public enterprise’......Page 456
SUMMARY......Page 458
NOTES......Page 459
INTRODUCTION......Page 462
THE PHARMACEUTICAL INDUSTRY AND THE SCHUMPETERIAN VIEW......Page 466
Concentration in R & D......Page 467
Dependence on ‘winners’......Page 468
Challenge over time......Page 469
Demand for ethical pharmaceuticals......Page 472
Changing demand structure......Page 473
Research and Development—growth and dispersion......Page 476
Summary......Page 478
Using shelters......Page 479
Generic competition......Page 482
Alternative sources for shelter......Page 483
Summary......Page 485
CONCLUSIONS......Page 486
APPENDIX I......Page 489
APPENDIX II THE UK PHARMACEUTICAL PRICE REGULATION SCHEME......Page 493
NOTES......Page 496
REFERENCES......Page 497
Name index......Page 498
Subject index......Page 501