Abstract:
We use the telecommunications industry and electricity market in New Zealand and payments systems in Canada and New Zealand to examine the implications of modern network technology for the organisation and governance of deregulated markets. Our analysis identifies natural monopoly components of networks as the key issue for the governance of these markets. We show how technological change has enhanced the scope for competition and reduced the desirability of public management and regulation in network industries. We argue that where natural monopoly or other problems persist private joint ventures are superior to public sector monopoly as a means of organising the activity. Light-handed regulation in which markets are constrained only by economy-wide competition law provides for the development of efficient private solutions to the special governance problems of network industries.
