Concluding Observations

Experience is demonstrating that competition is an important instrument for service quality and social issues. Competition may not result in operators offering the optimal quality, but it is difficult for regulators to improve on competitive market results without significant information on customers’ willingness to pay for quality. Competition provides operators with incentives to develop services, service qualities, and pricing arrangements that make services to the poor commercially viable. In situations where commercially viable services to the poor are technically infeasible, then subsidies may be needed. Competitive markets may also contribute to resolving some environmental issues if regulators and policy makers can create markets that allow operators to internalize the environmental externalities.

Regulators need information on operators and markets to optimally solving both price and non-price issues. Financial Analysis describes ways that regulators collect and manage information.