Review of Industrial Organization 16: 303–312, 2000.
© 2000 Kluwer Academic Publishers. Printed in the Netherlands.
Dominance in Hong Kong’s Gas Industry
Room GH213, Department of Business Studies, Hong Kong Polytechnic University, Hung Hom,
Kowloon, Hong Kong
Abstract. Although Hong Kong is widely regarded as a free and competitive economy, there are
actually no competition laws or comprehensive competition policies in Hong Kong. The government
argues that a sector-speciﬁc approach to safeguard competition is more practicable. In this paper,
a sector-speciﬁc approach is adopted to analyze the problem of dominance in Hong Kong’s gas
industry. Instead of imposing extensive government regulations on the dominant ﬁrm in the industry,
the author argues that a better way to discipline the ﬁrm is by introducing natural gas and a common
carrier system to Hong Kong.
Key words: Competition, regulation, gas industry, common carrier.
Hong Kong is widely regarded as a free and competitive economy. Various insti-
tutes have named the economy as one of the freest and most competitive economies
in the world.
But in reality, there are no competition laws and comprehensive
competition policies. In 1992, the Consumer Council of Hong Kong began to
study a number of industries where there was a lack of competition.
later published a summary report (Consumer Council, 1996), which recommended
the enactment of competition laws and adoption of comprehensive competition
policies in Hong Kong.
But the government did not accept the Council’s recommendations. The govern-
ment argues that the needs, requirements and characteristics of individual sectors
vary, so a sector-speciﬁc approach to safeguard competition is more practicable
(Trade and Industry Bureau, 1997, p. 6). If the government ﬁnds that effective
The author would like to thank two anonymous referees for their generous and enlightening
comments. Throughout the study, the author received kind support from the electricity and gas
companies in Hong Kong. Thanks must be given to Tokyo Gas and Osaka Gas in Japan for arranging
study visits for us in February 1998. This research is funded by the Hong Kong Center for Economic
These institutes include the Heritage Foundation, the Fraser Institute of Canada, the Interna-
tional Institute of Management Development and the World Economic Forum.
The industries identiﬁed by the Consumer Council for review include supermarkets, the banking
industry, gas industry, property development, broadcasting and telecommunications industries.