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POLITICS AND THE PURSUIT OF TELECOMMUNICATIONS SECTOR EFFICIENCY IN NEW ZEALAND

POLITICS AND THE PURSUIT OF TELECOMMUNICATIONS SECTOR EFFICIENCY IN NEW ZEALAND Economic analysis takes as its defining performance benchmark the pursuit of increases in efficiency. Competition law and industry-specific regulation provide two competing means of intervention whereby the pursuit of efficiency can be enhanced. Ultimately, legislators decide how governance of industry interaction will be allocated between these two institutional forms. Whereas competition law can govern interaction in most industries, where the underlying economic conditions are sufficiently different, industry-specific regulation offers advantages. However, its weakness is the risk of capture, leading to the subjugation of the efficiency end to the pursuit of other objectives. But if the regulatory institution could be bound in some way to pursue an efficiency objective, could the risk of capture be averted? New Zealand's light-handed regulation, instituted in 1987, attempted to enshrine the pursuit of efficiency into statute, first by relying solely upon competition law and contractual undertakings and subsequently creating a regulatory body with an explicit legislated efficiency directive. In practice, however, the inability of a government prioritizing efficiency to bind its successors to pursue the same objective renders sector strategy, and hence the efficiency objective, subject to political capture. Consequently, inherent systemic instability attends the pursuit of the efficiency objective and the institutions overseeing its enforcement. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Competition Law & Economics Oxford University Press

POLITICS AND THE PURSUIT OF TELECOMMUNICATIONS SECTOR EFFICIENCY IN NEW ZEALAND

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Publisher
Oxford University Press
Copyright
The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissionsoxfordjournals.org
Subject
ARTICLES
ISSN
1744-6414
eISSN
1744-6422
DOI
10.1093/joclec/nhp016
Publisher site
See Article on Publisher Site

Abstract

Economic analysis takes as its defining performance benchmark the pursuit of increases in efficiency. Competition law and industry-specific regulation provide two competing means of intervention whereby the pursuit of efficiency can be enhanced. Ultimately, legislators decide how governance of industry interaction will be allocated between these two institutional forms. Whereas competition law can govern interaction in most industries, where the underlying economic conditions are sufficiently different, industry-specific regulation offers advantages. However, its weakness is the risk of capture, leading to the subjugation of the efficiency end to the pursuit of other objectives. But if the regulatory institution could be bound in some way to pursue an efficiency objective, could the risk of capture be averted? New Zealand's light-handed regulation, instituted in 1987, attempted to enshrine the pursuit of efficiency into statute, first by relying solely upon competition law and contractual undertakings and subsequently creating a regulatory body with an explicit legislated efficiency directive. In practice, however, the inability of a government prioritizing efficiency to bind its successors to pursue the same objective renders sector strategy, and hence the efficiency objective, subject to political capture. Consequently, inherent systemic instability attends the pursuit of the efficiency objective and the institutions overseeing its enforcement.

Journal

Journal of Competition Law & EconomicsOxford University Press

Published: Jun 9, 2010

Keywords: JEL K21 K23 L43 L51

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