Liberalisation and regulation in European network utilities
This thesis considers different aspects of the liberalisation and simultaneous economic regulation of network utilities in the European Union. Two groups of arguments justify that regulation is maintained in these industries after the removal of barriers to competitive entry. The first group of arguments is linked to the natural monopoly characteristics displayed by such services. These imply that competition cannot be relied upon to restrain the dominant position of network operators. The second group of arguments relates to the social dimension, or public service nature, of utility services. The essential role played by these services justifies government intervention in form of price controls, universal service obligations and other qualitative regulations. The thesis has two parts of different nature, each part comprising two chapters. In the first part, an introductory chapter describes the framework within which the economic regulation of network utilities is inscribed, and discusses key trade-offs between different regulatory policy objectives. The second chapter analyses how the regulatory framework for liberalised network industries developed in the UK compares to the framework in place in Germany. Germany has embarked on reform of its network utilities considerably later than the UK, and displays unique characteristics in its industry structures, in particular a strong federal element. The German case illustrates how the general economic principles underlying the liberalisation and regulation process are interpreted in the European environment, and are adapted to national characteristics. The second part of the thesis focuses on specific aspects of liberalisation and regulation using econometric techniques. In chapter 3, access price elasticities in the fixed telephony industry are estimated on the basis of a pseudo-panel. The main question addressed is whether the rebalancing of tariffs that has taken place in the wake of liberalisation has had the potential to deteriorate household access to the fixed telephone network. The last and fourth chapter looks at patterns and determinants of supplier switching in the domestic gas and electricity markets in Great Britain using data from a true household panel. Its main conclusion is that the likelihood of supplier switching is influenced more strongly by variables linked to cost savings than by socio-demographic factors such as income.