Thursday, January 05, 2006

Regulation and wealth concentration

Governments around the world face the challenge to regulate the market without incurring in inequalities, to provide economic growth and wellness among the population.

Historically, utilities like telecommunications and electricity were considered natural monopolies and governments regulated them in order to provide universal access and fair prices. However, the privatization of those considered natural monopolies have brought high prices and poor services in the Telecommunication industry in some developing countries due to lack of competition and regulation.

New competitors are required to interconnect with incumbent operators and the conditions for that to happen have received widespread attention. In theory, it is possible for the incumbent to charge high interconnection fees to economically block competitors.

There is the perception of increased concentration of wealth due to privatization, however, there is not reliable information and data on this issue (at least I have not found).

On this matter, there is a phrase that best exemplifies the appropriate need for regulation and civic sector awareness to prevent further damage. The following text was written by Raghuram Rajam and Luigi Zingales.

“While the absence of rules makes the playing field uneven, too many rules of the wrong kind make ir uneven again- a truly free and competitive market occupies a very delicate middle ground between the absence of rules and the presence of suffocating rules. It is because this middle ground is so narrow that capitalism in it best for is very unstable. It easily degenerates into a system of the incumbents, for the incumbents, by the incumbents”


At 12:16 PM, Blogger Pamela said...

Super bueno tu blog, tienes que seguir publicando cosas interesantes y difundiendolo entre tus amigos.Mucha suerte!!

PD: Has sido seleccionado junto a cuatro maniaticos mañosos más. Visitame para que te enteres de qué se trata.


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