Economic Regulation in the Network Industries: where does it stand?

The purpose of this paper is to present the different forms of economic regulation in the network industries, following the debate about restructuring these industries. The main theories on (economic) regulation of the network industries are presented and the most important regulatory instruments available to regulators are identified. Several regulatory theories were developed over the past decades proposing different types of public intervention in the market, and up to a certain extent influencing the nature of the reform process. Depending on the region, this process is characterised by the privatisation and/or the liberalisation of network industries. Even in situations where it is difficult to introduce competition, some theories explore alternative mechanisms to overcome this limitation, which consequently influences regulation. In practice, deregulation in the network industries pertains essentially to command-and-control types of regulation, and not all the types of intervention in the market. In reality, instead of complete deregulation, there has been a move towards different types of intervention (a process also known as re-regulation), with a special emphasis on incentive regulation.