Ingo Vogelsang

Have you ever wondered how your telephone company or Internet service provider can give you access to almost all people in the world, or how electricity suppliers can compete with each other if there is only one electric supply line passing through your street? This Element deals with the economics and public regulation of such network industries. It puts particular emphasis on the specific economic concepts used for analyzing them and on the regulatory reform movement and the compatibility of regulation and competition. Worldwide most of these industries have changed dramatically in recent years, telecommunications in particular. Network industries mostly exhibit economies of scale in production and similar economies in consumption. Both of these properties cause market power problems that often require industry-specific regulation. However, due to technological and market changes network policies have moved on from end-user regulation to wholesale regulation and in some cases to deregulation.

These volumes are concerned with the economic impact of governments as regulators, designers of economic policy and as economic agents in their own right.

The past decade has witnessed a surge of pricing innovations in the U.S. telecommunications industry. This book systematically reviews recent innovations in the economic theory of pricing and extends results to the conditions which characterise telecommunications markets. The implementation of normative pricing theory is examined in selected US telephone tariffs, providing a rich and diverse data base and laboratory for examining the practical consequences of pricing innovations. The authors develop and illuminate the relationships between the normative economic theory of pricing - with its objectives of social welfare, economic efficiency, and fairness - and telecommunications pricing as it is practised by business and regulators. The general theoretical pricing principles and lessons of US pricing experience discussed are directly applicable to telecommunications services in other countries, and to numerous other industries including electricity, gas, rail and air transport, and postal services, as well as economists studying the economic theory of pricing.

The past decade has witnessed a surge of pricing innovations in the U.S. telecommunications industry. This book systematically reviews recent innovations in the economic theory of pricing and extends results to the conditions which characterise telecommunications markets. The implementation of normative pricing theory is examined in selected US telephone tariffs, providing a rich and diverse data base and laboratory for examining the practical consequences of pricing innovations. The authors develop and illuminate the relationships between the normative economic theory of pricing - with its objectives of social welfare, economic efficiency, and fairness - and telecommunications pricing as it is practised by business and regulators. The general theoretical pricing principles and lessons of US pricing experience discussed are directly applicable to telecommunications services in other countries, and to numerous other industries including electricity, gas, rail and air transport, and postal services, as well as economists studying the economic theory of pricing.

Much has been written about the current trend toward privatization of public enterprises. Selling Public Enterprises is the first book, however, to use economic logic to develop a quantitative approach to making divestiture decisions. Using the standard tools of applied microeconomics, the authors propose a method of valuing state-owned firms both before and after divestiture by the government. Their valuation method offers significant advantages over those commonly in use (such as book value of assets) and can provide governments with a reliable means of evaluating the costs and benefits of reforming state-owned enterprise policies and procedures. Selling Public Enterprises focuses on the pivotal questions of whether the enterprise should be sold, to whom should it be sold, and at what price. It identifies the social value of the enterprise under continued government operation, the social value under private operation, and the private value under private operation as being critical in determining the answers to these questions. In each case "social value" indicates the economic promise of such a venture to both households and firms of the country involved.The authors take up such topics as shadow pricing, the basic framework of welfare aggregation, the valuation of public income, private income and investment income, base flows and stocks, and the effect of sale prices on public and private values. They discuss the possibility of synergies and strategic behavior and present both a valuation algorithm and a sensitivity analysis. In the concluding chapters they address distributional realities and describe various dimensions of divestiture policy such as lifting constraints on enterprise behavior, improving the net benefit of divestiture, and coping with political constraints.

First published in 1989. Routledge is an imprint of Taylor & Francis, an informa company.