Competition in Network Industries : Where and How to Introduce It
If privatizing network industries is to bring lasting public benefits, governments should also attempt to introduce competition. The scope for such competition is growing with increasing deregulation and technological innovation. As technology cont...
| Main Authors: | , |
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1997/01/695040/competition-network-industries-introduce http://hdl.handle.net/10986/11597 |
| Summary: | If privatizing network industries is to
bring lasting public benefits, governments should also
attempt to introduce competition. The scope for such
competition is growing with increasing deregulation and
technological innovation. As technology continues to
improve, the use of "smart
markets"--computer-assisted auction systems to clear
competitive but complex markets--is likely to become
feasible for an ever-expanding group of products and
countries. This Note outlines the opportunities for
introducing network competition--competition for the market,
competition over existing networks, and competition among
networks. It briefly considers in each case whether it will
become easier or more complicated. It looks at how these
opportunities could be applied in different networks. And it
concludes with some basic guidelines for introducing
competition: 1) the more complex the network and the lower
the sunk cost, the more value there is likely to be in
introducing competition from other networks. 2) Where
technical change is rapid, defining the bonds of natural
monopoly will be more difficult and the dynamic benefits of
competition will be large. 3) Where government capacity to
be benevolently and efficiently recognize natural monopoly
and establish barriers to entry is weak, entry probably
should not be limited by policy. |
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