Concluding Observations

Regulation is performed in a network of relationships among persons and institutions that differ in their objectives, incentives, and sets of information. For regulation to result in effective and efficient sector performance – which is necessary for customers to receive their maximum benefit from the sector – decision-making procedures should be in place to limit information asymmetries and that provide incentives for operators, government, and regulators to work for the best interest of customers and the economy. This generally means that (1) effective competition should be encouraged whenever possible, (2) the regulator should gather information about the sector and should provide stakeholders with information on the regulator and his or her decisions, (3) incentive regulation should reward the operator with the opportunity for higher profits when he accepts performance goals that make customers better off, (4) requirements should be established for service quality and access for the poor, and (5) regulatory processes should align the goals and capabilities of the regulator with the welfare of customers.