Regulation of Telecommunications: The Choice Between Market and Regulatory Failures
| Autor | Dmitrii Trubnikov |
| Cargo | Candidate of Economic Sciences. Doctoral Candidate of Erasmus Mundus Joint International Doctoral (Ph.D.) Degree in Law, Science and Technology coordinated by CIRSFID, University of Bologna, Italy. Supervised by Tilburg Institute for Law, Technology, and Society (TILT), Tilburg University, the Netherlands, and Mykolas Romeris University, ... |
| Páginas | 25-46 |
Regulation of Telecommunications: The Choice Between Market and … (p. 25-46) 25
TRUBNIKOV, D.
Regulation o f Telecommunication s: The Choice Between Market and Regulatory Failures
.
The
Law, State an d Telecommunication s Review
, v. 9, n. 1, p. 25-46, May 2017.
[DOI: https://doi.org/10.26512/lstr.v9i1.21511]
Regulation of Telecommunications: The Choice Between Ma rket
and Regulatory Failures
Submitted
: 15/02/20 17
Dmitrii Trubnikov*
Revised
: 24/03/ 2017
Accepted
: 09/04/2 017
Abstract
Purpose –
The paper examines the mai n regulatory fr ameworks of the
telecommunica tions industry t hrough the concep t of market failur e and analyses how and
why the policy often leads to undesirab le outcome s that might be considered as
regulatory fai lure.
Methodology/appr oach/design –
The research uses the EU regulatory frame work fo r
electronic c ommunications as a base for the analys is of the main policy objecti ves
through the prism of the market failur e theory with an eye to th e interests of t he main
market player s in the telecommunicatio ns markets.
Findings –
About any aspect of regul ation allows to fi nd ways to create opportunities for
some groups of the industry and stifle activity of others. Despite the theory of mark et
failure prov ides reasonable j ustifications for regul ation of telecommuni cations markets, it
is possible to argue that many of t hese problems are mai nly the consequence of the policy
and could be bett er solved by market mechan isms.
Originality/value –
The results of the research allow to loo k at the problems of
telecommunica tions development and issues of the high level of concentration of the
telecommunica tions markets as regulator y formed problems rathe r than cons equences of
the inherited industry’s ch aracteristics.
Keywords: Liberalization, Ma rket failure, Reg ulatory failure, Telecommunicat ions,
Competition.
*
Candidate of Economic Scien ces. Doctoral Ca ndidate of Erasmus Mundus Joint Interna-
tional Doctor al (Ph. D.) Deg ree in La w, Scie nce an d Techn ology coordinated by
CIRSFID, University of Bolo gna, Italy. Supervised by Tilb urg Institute for Law, Tech-
nology, and Society (TILT), Tilburg Un iversity, the Netherlands, and Mykol as Romeris
University, Vilnius, Lithuania. Ema il: d.trubnikov@uvt.nl.
The author is grateful to Ronald Leenes and Pierre Larouche for helpful comments and
discussion. T he views expressed in the a rticle and any errors are those of the author.
26
Regulation of Telecommunications: The Choice Between Market and … (p. 25-46)
TRUBNIKOV, D.
Regulation o f Telecommunication s: The Choice Between Market and Regulatory Failures
.
The
Law, State an d Telecommunication s Review
, v. 9, n. 1, p. 25-46, May 2017.
[DOI: https://doi.org/10.26512/lstr.v9i1.21511]
1. Introduction
Debates about the role of government in eco nomy are very old. It has
been incorporated in the mainstream of economics that market mechanisms
sometimes lead to undesirable situations, so-called, “market failure”, and,
therefore, there are needs to interfere in the market in order to mitigate the
problem. These interventions also can have a negative impact on the econo my,
and, such consequences can be considered as government or regulatory failure.1
The imperfection of the market seems as an apparent justification for the
attempts to regulate the economic activity of human beings, but, at the same
time, those groups of people who have a real access to the for mation and
exploitation of regulatory mechanisms have an enormous temptation and
tremendous opportunities to use a legal s ystem for their own benefits. Therefore,
it is of a paramount significance to understand how regulation can be used for
the interests of such interest groups and to expose the relationship between
regulatory frameworks, that should be aimed to remedy market failure, with
interests of those who create them or can have access to their formation.
Interesting examples where regulation p rovides wide opportunities for
policymakers to enrich some powerful groups at the expense of society can be
found in industries that heavily depend on innovations and play a significant role
in modern society. The regulatory failures in these fields affect the public
welfare, contribute to the growth of inequality and undermine incentives for
innovations in the fields of the new economy. From this point of view, the
telecommunications industry is an attractive area for such analysis, and,
furthermore, the concentration of power in this industry allows to assume that
this situation can be a result of the government activity in this area.
The article begins with a brief review of theoretical approaches to
determination of market and government failures. The subsequent parts are
devoted to the transformation of the la ndscape of telecommunications over the
last decades and to the analysis of key issues of regulator y polic y in the field.
The main emphasis is made on the reasons for the government interventions in
the telecommunications market from the po sitions of t heories of market failure,
and, at the same time, provides basic assumptions how and why these
interventions lead to the policy failings and express in the oligopo listic structure
of the industry.
1
The term “regulatory failure” can be often met in acade mic literature with the same
interpretation as government failure, but it can also mean the failing to achie ve certain
regulatory go als regardless of the econo mic aspects (see, e.g., B aldwin et al., 2012).
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