Preface

Summary

This volume is the outcome of a research project initiated by the World Bank. In recent years, the Bank has been actively supporting efforts at privatization in developing countries. For utilities in particular, it has become clear that the regulatory framework was an important determinant of the success or failure of these efforts. Yet there were important gaps in knowledge as to appropriate regulatory design across different institutional settings. Consequently, a first objective of the research project was to learn from experience as to what worked in the regulation of telecommunications – and, by extension, in utility regulation more broadly.

A second objective of the research was to probe what might be the practical relevance for World Bank work of the “new institutional economics” (NIE). Many World Bank staff were intrigued by the conceptual advances and the empirical findings emerging from the NIE research agenda – but were unclear as to the concrete implications of the intellectual advances for policy design. Some key characteristics of utilities – important economies of scale and scope, assets which can be specific and nonredeployable in other uses, and the frequent politicization of utility pricing – are presently those which have received detailed attention in the NIE literature. Consequently, there was much background work on which an applied study of regulation of telecommunications could build.