Privatization Public Ownership And The Regulation Of Natural Monopoly

C.D. Foster drawing on his enormous experience in Government, industry and academia, has written a most comprehensive study of privatization policy under the Conservative Government of the last 2 years. In this lucid, non-technical work, Foster draws on the history of state intervention, regulation, and nationalization of industries that were argued to be natural monopolies, for example, the railways. The failure of nationalized industries, Foster argues, is rooted not only in inefficiency, but in the lack of any clear performance indicators of what such public enterprises should be achieving. These observations open out his book into a discussion of the development of privatization under Mrs Thatcher (not apparently part of a big plan, but more a muddling through of policy ideas). Subsequently Foster contrasts the legal and economic construction of regulation in the US to the looser rein of the new British style of regulation. The remaining chapters evaluate the performance and regulation of the newly privatized enterprises and Foster finds that on balance the new regulatory structures are workable and have avoided many of the problems of the past. Foster's scholarly and measured, yet accessible book is a moderate defence of what became a central ideological plank of Thatcherism. He calls for a carefully thought through planning of regulation where other States are thinking of privatizing their public enterprises. He also discusses how far the same objectives can be achieved through public enterprise reform. This book, given the wealth of detail about public policy should appeal greatly to lawyers, economists and political scientists, as well as those on courses in public administration and other professionals.

Seminar paper from the year 2004 in the subject Economy - Theory of Competition, Competition Policy, grade: 1, University of Ulster (School of Business Organisation and Management), course: Business Economics, 12 entries in the bibliography, language: English, abstract: Index Introduction 1. The market forces argument 4 2. Breakdown of the market forces argument in natural monopolies 6 3. Economic key issues which regulators of privatised industries should consider 8 4. References 12 Introduction This essay covers some issues of privatisation and regulation. It is divided into three parts. Part one gives a brief outline of the author s understanding of the market forces argument for privatisation. In the second part it is explained what is meant by a natural monopoly and why the market forces argument does not hold if an industry is a natural monopoly. The third part then discusses which economic key issues should be considered by the regulatory body of a privatised industry. Privatisation is the transfer of public ownership away from the state to private ownership. Regulation is a limitation on the behaviour of firms or organizations, imposed by the government. From the view of competition it is the aim to remove market distortions which are caused by public enterprises and regulations (Case K. et al. 1999: 356.)

Disappointment with insider trading in Russia, with voucher privatization in the Czech Republic, and with the privatization of infrastructure in many developing countries in many developing countries has spawned new critiques of privatization. How do theory and empirical evidence answer the much-debated questions, which is more important to performance, competition or private ownership? Are state enterprises more subject to welfare-reducing interventions by government than private firms are? Do state enterprises suffer more from problems of corporate governance?

Considered the cutting edge of microeconomic theory in the 1970s, natural monopoly research remains an active and fertile field. Policy makers and regulators have begun to implement entry and pricing policies that are based on theoretical and empirical analyses. This book develops a comprehensive framework for analyzing natural monopoly. The authors first present a historical overview of regulatory economics, followed by analyses of optimal pricing and investment for single- and multiproduct natural monopolies. Topics covered include cost and demand structures, efficiency impacts of linear and multipart pricing, peak-load pricing, capacity determination, and the sustainability of natural monopolies. After a survey and analysis of natural monopoly regulation in practice, the links between technological change and regulation are identified. The book concludes with a discussion of the alternatives to traditional regulation, including public ownership, franchise schemes, quality regulation, and new incentive systems. Throughout the book, issues from the telecommunications and energy industries are used to illustrate key points. Its integrated framework will make it useful to academic economists, regulatory analysts, business researchers, and advanced students of public utility economics.

The process of selling assests and enterprises to the private sector raises questions about natural monopolies, the efficiency and equity of state-owned versus privately owned enterprises, and industrial policy. This comprehensive analysis of the British privatization program explores these questions both theoretically and empirically.