Prague Economic Papers 2003, 12(1):57-67 | DOI: 10.18267/j.pep.206

Utilities: deregulated or re-regulated?

Jiří Schwarz
Liberální institut, Spálená 51, CZ - 110 00 Prague 1 (e-mail: jiri.schwarz@libinst.cz).

This article addresses the restructuration of the utilities sector/industry, a process generally described as deregulation. At the core of deregulation processes, not only in the EU, but also in the US, lies the replacement of old-fashioned forms of state regulation based on ownership control by new forms of regulation based on the operation of an independent regulatory body. In Central and Eastern European countries undergoing economic transition, surviving communist-type behavior, along with half-implemented EU deregulation directives, have led to specifically re-regulated utility markets. The new forms of regulation applied in the process of deregulation have served only to preserve the market protection of former state monopolies. Regulators who manage deregulation processes in the EU style allocate benefits across organized producer and consumer groups, so that the regulators' total utility is maximized.

Keywords: captive customer, cross-subsidy, deregulation, interest group, natural monopoly, public service, re-regulation, regulator, regulatory failure, rent-seeking process
JEL classification: B29, L51, L59, L94, L98

Published: January 1, 2003  Show citation

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Schwarz, J. (2003). Utilities: deregulated or re-regulated? Prague Economic Papers, 12(1), 57-67. doi: 10.18267/j.pep.206
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