The Political Economy of Regulation and Competition

This proposal attempts to explore the importance of integrating the political economy concerns in the design and implementation of regulatory and competition policies/strategies in the infrastructure sector. A national consensus to separate issues of regulation and competition out of the political agenda is still not happening in many developing economies. As these economies move through the reform process, political institutions need to reflect on this fundamental issue.

The political economy difficulties/lessons that emerge from this study will shed light on the regulatory capacity of the state, and will explore the inter linkages between the state, politics and business. The study also expects to analyse the impact of the poor design and implementation of regulatory policies on the growth of the sector and consumer welfare.

The issue which this study is interested in, is to explore the nature and levels of the issues of competition which can be effectively incorporated in the regulatory structure. The mutually reinforcing nature of regulation and competition policies requires active coordination between the agencies even in the early stages of opening-up, which is important for many developing countries, as they are setting up sector specific regulatory bodies. The changing dimensions of market failure in the light of developments in technology, and property rights give rise to more opportunities and challenges for developing the integrated/appropriate regulatory and competition strategies. However contemporary research have found out that the boundaries between the roles of the sectoral regulators and the competition policy are difficult to define, and in many countries the competition authority has direct overlap with sectoral regulators.