Common Roles of Regulators

Note: Readers should cross-reference this section with Regulatory Objectives and Priorities on objectives and priorities.

Core References

Managing the Regulatory Process: Design, Concepts, Issues, and the Latin America and Caribbean Story
Washington, D.C.: The World Bank Group, 1999, Chapters 2 and 3.
Guasch, J. Luis, and Pablo Spiller

Describes the design of regulatory agencies and relates the design to the reasons for regulation. Provides a case study of Jamaica.

The Economics of Regulation: Principles and Institutions
Cambridge, MA: MIT Press, 1988, Reissue Edition, Chapter 2.
Kahn, Alfred

Describes the basic economic functions of the utility regulator, focusing primarily on service quality, controlling the overall price level, and determining rate structure.

Utility Regulators: Roles and Responsibilities
Note no. 128 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1997.
Smith, Warrick

Examines issues of sector coverage, relationships with ministers, and relationships with other government agencies.

Sectoral References

ELECTRICITY

Strengthening of the Institutional and Regulatory Structure of the Brazilian Power Sector
World Bank Report on the PPIAF Project for Brazil Power Sector, Task 4, Washington, D.C., December 2002.
Brown, Ashley C., and De Paula, Ericson

Examines regulatory roles in granting concessions, conducting auctions, and sector planning. Roles in auctions include setting the terms and conditions and ensuring that auctions are conducted fairly and transparently. Describes potential conflicts of interest in having regulators involved in concessions and auctions. Also describes key considerations in deciding whether regulators should have roles in sector planning.

TELECOMMUNICATIONS

Designing Next Generation Telecom Regulation: ICT Convergence or Multisector Utility?
Center for Information and Communication Technologies, Technical University of Denmark, Lyngby, January 2003.
Henten, Anders, Rohan Samarajiva, and William H. Melody

Examines how convergence raises new regulatory issues such as security, privacy and consumer protection. It may also lead to the integration of telecom and broadcast media regulation. Also examines advantages and disadvantages of multi-sector regulators.

Telecommunications Regulations: Institutional Structures and Responsibilities
Working Paper no. 237, Organization for Economic Co-operation and Development (OECD), Washington, D.C., 26 May 2000.
Min, Wonki

Explains that there is a lot of variety among nations on the roles of regulators. Typical responsibilities of the regulator (or ministry) include licensing, interconnection, spectrum management, numbering, price regulation, universal service, and service quality.

Telecommunications Legislation in Transitional and Developing Economies
World Bank Technical Paper No. 489, October 2000.
Schwarz, Tim, and David Satola

Examines the design of telecommunications legislation in transitional and developing economies for liberalizing and privatizing telecommunications. Provides a framework for debate on a policy level about a variety of issues. Also examines international best practice.

TRANSPORTATION

Case Studies: Private Sector Participation in Infrastructure in Uganda, Ghana, and Nigeria
Working Paper number 44, African Development Bank, Washington, D.C., 2004.
Ayogu, Melvin D.

Finds that Governments can be slow to admit private participation in infrastructure even with good evidence that involving the private sector is welfare improving. Pressure to dislodge bureaucrats and involve more private participation must be sustained. Also argues that an ideal regulatory regime is one that evolves into a buffer between operators and government, ensuring that operators conform to economic and social objectives, resolves disputes between competitors and between consumers and operators, as well as monitors changing industry conditions. The more activities that reside in the private sector, the better the prospects that the regulator would be unhampered by political interference.

The Theory of Access Pricing
Policy, Research Working Paper 2097, World Bank, Washington, D.C., 1999.
Valletti, Tommaso and Antonio Estache

Discusses access pricing which is an important component of a regulatory environment guaranteeing that competitors have access to the services of potential “bottleneck” facilities too costly to duplicate. Rules covering fair access to these facilities – including fair access prices – generally improve economic efficiency by easing competition in markets both upstream and downstream from the bottleneck. Appropriate access pricing rules are especially needed when a dominant firm controls the supply of one or more inputs — for example, gas transportation, electricity transmission, local telecommunication access, or railway track — vital for its competitors.

Privatization and Regulation of Transport Infrastructure: Guidelines for Policymakers and Regulators
World Bank Institute Development Study, World Bank, Washington, D.C., 2000.
Estache, Antonio

Addresses liberalization of transport policies and the role played by private operators and investors in transport infrastructure. Provides an overview of why economic regulation is important and examines four subsectors: airports, ports, railways, and roads. Discusses for each subsector: relevance from the viewpoint of a regulator; main privatization and regulation trends; price and quality regulation issues that characterize the sector, and performance indicators that the sector’s regulators should be able to rely on to be effective in their jobs.

Public and Private Sector Roles in the Supply of Transport Infrastructure and Services
Transportation Paper Series number 1, World Bank, Washington, D. C., 2004.
Amos, Paul

Provides a framework for identifying and assessing the different models for public and private roles in the transport sector. Highlights policy and regulatory issues which are important in judging the suitability of different models; and summarizes the range of instruments available.

A Primer on Efficiency Measurement for Utilities and Transport Regulators
Washington, D.C.: World Bank Group, 2003.
Coelli, Tim, Antonio Estache, Sergio Perelman, and Lourdes Trujillo

Provides an overview of the techniques offered to regulators of recently “privatized” utilities and transport services. Designed as a starter kit, it surveys the options available and provides guidelines as to how to chose between these options, identifying the costs and benefits of the various approaches in situations most relevant to regulators. Covers the measurement of efficiency in the context of a tariff revision aiming at redistributing at least some of the efficiency gains from the producers to the users. Also addresses the challenges from comparative efficiency assessments allowing the introduction of yardstick competition.

WATER

The Role of the Regulator
2002.
OFWAT

Describes Ofwat’s roles and practices in the U.K.

Other References

The Road to Serfdom
Chicago: University of Chicago Press, 1944 (reprinted 1994).
Hayek, F.A.

Explains how expert agencies necessarily apply their value systems in carrying out their responsibilities.

Key Words

Regulation, Regulatory agencies, Service quality, Rates, Prices, Planning

Case Studies

Regulatory Reforms in India: Effectiveness, Efficiency, and Impacts
The Energy and Resources Institute, New Delhi, India, 2003.
Garg, A., M. Kabra, and R. Kacker