• Mark A. Jamison
Part of the Studies in Industrial Organization book series (SIOR, volume 22)


Countries around the globe are reforming their utility markets. Chile, Argentina, Australia, and the UK are examples of countries that have privatized and liberalized energy and telecommunications markets. Numerous countries signed the World Trade Organization Agreement on Basic Telecommunications, in effect committing themselves to opening certain markets and establishing independent regulatory agencies.


Incremental Cost Natural Monopoly Downstream Firm Hotelling Model Oligopoly Model 
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  1. 1.
    Private participation in infrastructure refers to any project where private companies participate in providing the service. Roles the private companies may fulfill include system building, system management, and system ownership.Google Scholar
  2. 2.
    Economists have also developed theories of why regulation occurs. These theories are beyond the scope of this book. For discussion of this topic, see Viscusi, Vernon, and Harrington ( 1995, pp. 13–54, 322–345 ).Google Scholar
  3. 3.
    Price rebalancing refers to allowing companies to align prices more closely with their underlying costs. Regulators often allow companies to rebalance prices when markets are opened to competition. The EU imposes telecommunications price rebalancing requirements on its member states.Google Scholar
  4. 4.
    William G. Shepherd (1984) was an early critic of this theory.Google Scholar
  5. 5.
    For a technical explanation of the monopoly model, see Tirole (1988, pp. 66 ff.) and Hal Varian (1992, pp. 233 ff.). For a history of the theory of natural monopoly, see Sharkey (1982b).Google Scholar
  6. 6.
    This loss might also be called a misallocation of resources.Google Scholar
  7. 7.
    For a technical explanation of the oligopoly model, see Tirole (1988, pp. 205 ff.) and Varian (1992, pp. 285 ff.).Google Scholar
  8. 8.
    In some models, there are multiple Nash equilibria. The economist’s challenge is to determine which of these equilibria are the most likely so policy makers can make informed decisions about firm behavior.Google Scholar
  9. 9.
    Unless otherwise stated, all currency is US dollars.Google Scholar
  10. 10.
    This assumption that a firm can lose all of its customers if a competitor charges a slightly lower price is identical in effect to the contestable market model.Google Scholar
  11. 11.
    In contrast, the supergame approach assumes that firms change prices simultaneously.Google Scholar
  12. 12.
    In general, economies of scale exist when average costs decline as production increases. Economies of scope exist when jointly producing two products costs less than producing the products separately. See Chapter 3 for more complete explanations of economies of scale and economies of scope.Google Scholar
  13. 13.
    Examples of recent states to adopt incremental cost standards include Ohio, Illinois, and Tennessee.Google Scholar
  14. 14.
    Pub. L. No. 104-104, 110 Stat. 56. The Telecommunications Act of 1996 amends the Communications Act of 1934, 47 U.S.C. 151 et seq. Hereinafter, this is simply referred to as the US Telecommunications Act of 1996, or the Act.Google Scholar
  15. 15.
    The oligopoly models analyze all of the oligopoly firms rather than just one firm. In these models, the term “Primary firm” refers to all of the oligopoly firms.Google Scholar

Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • Mark A. Jamison
    • 1
  1. 1.Public Utility Research CenterUniversity of FloridaGainesvilleUSA

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