THE COEXISTENCE OF REGULATION, STATE OWNERSHIP AND COMPETITION IN INFRASTRUCTURE INDUSTRIES: Quagmire or Institutional Innovation?

In many countries infrastructure liberalization proceeded faster than the privatization of former state monopolies. Regulatory agencies, established to oversee the transition and safeguard the preconditions for competition, therefore monitor state-owned firms in addition to privately owned firms. Prior accounts of similar arrangements have generated contradictory claims. The paper studies two propositions of this literature theoretically and empirically for the European telecommunications sector. It examines, firstly, whether the dual role of the state as owner and regulator distorts competition. Secondly, it probes whether the combination of government ownership and regulation helps overcome some of the shortcomings of the regulation of private firms. THE COEXISTENCE OF REGULATION, STATE OWNERSHIP AND COMPETITION IN INFRASTRUCTURE INDUSTRIES: Quagmire or Institutional Innovation?