06 June 2001
The Implementation and the Effects of Regulatory Reform
This article reviews trends, outcomes and issues in regulatory reform in OECD countries. First, it summarises the evidence on the evolution of regulatory environments and the economy-wide and sectoral effects of reforms (including privatisation) in both competitive and non-competitive industries in the past two decades. Turning to network industries, it then discusses the main policy issues raised by the need to adapt the regulation of the non-competitive segments of these industries to increasing competition in liberalised markets. It focuses on four topics that dominate the debate over regulatory reform: i) the move from command-and-control to incentivebased regulatory approaches relying on the removal of entry barriers in competitive markets, the adoption of price-cap mechanisms and the design of efficient and competitively-neutral charges for accessing the fixed networks of incumbents; ii) the pros and cons of structural measures such as privatisation, and vertical and horizontal separation of formerly integrated monopolies; iii) the ways to ensure that important non-economic objectives, such as universality of service, continue to be achieved in a more competitive environment at a minimum cost for society; and iv) the design of regulatory mechanisms and institutions that encourage best practice regulation.
06 June 2001
Regulation, market structure and performance in telecommunications
The paper uses an international database on regulation, market structure and performance in the telecommunications industry to investigate the effects of entry liberalisation and privatisation on productivity, prices and quality of service in long-distance (domestic and international) and mobile cellular telephony services in 23 OECD countries over the 1991-1997 period. The data on regulation and market structure is analysed by means of factor analysis techniques in order to group countries according to their policy and market environments. Controlling for technology developments and differences in economic structure, panel data estimates show that prospective competition (as proxied by the number of years remaining to liberalisation) and effective competition (as proxied by the share of new entrants or by the number of competitors) both bring about productivity and quality improvements and reduce the prices of all the telecommunications services considered in the analysis. No clear evidence could be found concerning the effects on performance of the ownership structure of the industry (as proxied by both the public share in the public telecommunications operators and years remaining to privatisation).
06 June 2001
Regulation, industry structure and performance in the electricity supply industry
This article seeks to assess the impact of liberalisation and privatisation on performance in the generation segment of the electricity supply industry. Regulatory indicators for a panel of 19 OECD countries over a 10 year time period were constructed to examine the influence of regulatory reform on efficiency and price, and to assess the relative efficacy of different reform strategies. The presence of data with both cross-country and time-series dimensions allows separate identification of country specific and regulatory effects. The primary findings are that while changes in legal rules may be slow to translate into changes in conduct, unbundling of generation, private ownership, expanded access to transmission networks, and the introduction of electricity markets impact various aspects of performance in a statistically significant way.
06 June 2001
Regulation, market structure and performance in air passenger transportation
The paper uses a data base on regulation, market structure and performance in the air passenger transportation industry, to analyse the links among liberalisation, private ownership, competition, efficiency and airfares at national and route levels. Covering the 1996-97 travel season, 21 aggregate indicators have been developed for 27 OECD countries, and 23 micro indicators for 102 air routes connecting 14 major international airports. These data are summarised by means of factor analysis. Controlling for market size, network length and other technological and economic differences, and combining national and route-level characteristics, cross-country and cross-route regressions show that i) productive efficiency increases and fares decline when regulations and market structures become more friendly to competition; ii) productive efficiency is sensitive to actual competitive pressures, as proxied by market concentration; iii) fares react to liberalisation independently from market structure, but in liberal environments their decline is amplified by actual competition between carriers; iv) business and economy fares tend to decline when they are liberalised and market concentration is reduced, but tend to increase when markets are dominated by airline alliances on the route; v) discount fares are affected by the overall market environment at route ends, charter regulations and the actual presence of challenger airlines on the route; and vi) airport congestion and dominance tend to increase fares in time-sensitive market segments.
06 June 2001
Regulatory reform in road freight
This study analyses regulatory developments across OECD Member countries in the road freight industry, with a focus on how these developments have affected competition and performance. Over the past two decades, a growing number of OECD countries have recognised that regulations unduly restricting competitive developments in this industry needed to be relaxed. Still, the pace and scale of liberalisation has varied widely from one country to another. The main remaining impediment to competition is the restrictive web of bilateral international and/or multilateral agreements that continue to impose discrimination on foreign hauliers. The empirical evidence available suggests that liberalisation has promoted efficiency and consumer welfare in the countries that have implemented reforms.
06 June 2001
Regulatory reform in retail distribution
The main purpose of this paper is to analyse cross-country differences in the regulation of the retail distribution industry in the OECD area, focusing on the situation in 1998. Regulatory differences are cast against changes in the industry environment to highlight the potential interactions between regulation and market forces. A number of countries have extensively liberalised market access and price and service regulations. In some countries there is currently a tendency to introduce access restrictions for large outlets. In other countries market access has been traditionally hindered by restrictive regulations and administrative burdens. The available empirical evidence suggests that regulations that restrict shop opening hours and hinder access by imposing special requirements for outlet registration, siting and/or size thresholds curb the dynamism of the industry (e.g. lowering entry and exit rates, and preventing restructuring and modernisation) and competitive pressures, leading to lower employment growth and higher consumer prices.