Natural Monopoly
Exam
16. To what extent does economic theory predict that privatization will lead to greater productive efficiency compared with state-owned enterprises? How far does the empirical evidence show that privatization on its own, or combined with institutional reforms and market opening, delivers such efficiency gains in practice?
17. Discuss the relative advantages and disadvantages of RPI-X regulation as compared with rate of return regulation. Taking into account of the impact on efficiency, prices and also distributive justice, do you think RPI-X regulation has been a success in the UK? How do you see regulatory policy evolving in the future?
18. Define natural monopoly … To what extent is ‘ex ante competition’ (also referred to as ‘competition for the market’) a preferred policy tool for dealing with natural monopoly compared with either regulation or ‘competition in the market’? Your answer should consider both theory and empirical evidence.
19. Describe the assumptions and predictions of public and private interests theories of regulation. Explain which theory you consider to be most theoretically (1 word..). Which do you think best explains actual regulatory practice in Europe and the US?
20. Outline the underlying assumptions and predictions of the theory of contestable markets. Does the theory have any relevance for policy makers? Justify your answer by reference to relevant empirical cases
