The Design of Economic Regulation for Utilities: A Primer

The design of economic regulation involves a hierarchy of choices beginning with the specification of objectives and principles and extending beyond the selection of a general method to more detailed considerations. Similarly, the implementation of a regime requires a clear appreciation of concepts that are rarely, if ever, used outside a regulatory environment. Recognising that the task of regulatory design and implementation often falls to analysts with limited experience in this area, the aim of this paper is to provide an accessible introduction to the most important issues. * This paper was written for the CRNEC Policy Conference, Auckland, September 1-2, 1999. The author thanks the Regulation Initiative at the London Business School for their hospitality Address for Correspondence: John Small, Centre for Research in Network Economics and Communications, University of Auckland, Private Bag 92019, Auckland, NEW ZEALAND. email: [email protected]