Regulating infrastructure : monopoly, contracts, and discretion /

Infrastructure includes industries that should not be left completely to free (unregulated) market forces, e.g., telephones, electricity, gas, water, railroads, airlines, and expressways. Many of these industries are considered "natural monopolies" where free markets are inadequate without government intervention. Solutions include public (government) ownership, discretionary regulation of prices and capacity, and concessionary contracts (government intermediation). Gomez-Ibanez (urban planning and public policy, Harvard) explores the strengths and weaknesses of these regulatory options (concessions, private contracts, public ownership, price-cap regulation), judging that market oriented and contractual solutions are generally preferable to regulation, and that any regulatory scheme is bound to evolve with experience. The analysis rests on transactions cost economics, including property rights. Specific industries provide welcome examples for the analysis: bus regulation in Sri Lanka, electricity and railroads in Argentina, electricity (many countries), railroads and airlines in the US, water and rail in Britain. Well written, with extensive explanatory notes. No equations or math, little theory beyond transactions cost analysis (theory of the firm), but much helpful history and politics in the examples. ^BSumming Up: Recommended. Public and college library collections. R. A. Miller Wesleyan University