Competition, Economic Regulation and Affordability in Infrastructure Industries: An Economic History 1840-1980

Abstract

This paper discusses the role of affordability in the development of economic regulation from the emergence of railway regulation in the 1840-60 period. It also covers the regulatory responses to the development of network telecoms, electricity and the water and sewerage industries, primarily in the UK and US. These network infrastructure industries were initially established as competitive industries but by 1920 had almost everywhere become vertically and horizontally integrated monopolies. This period saw the emergence of legally established independent regulatory agencies at municipal, legal and national levels. Affordability was a major issue in these developments and continued to be so until into the 1950s and after. The paper ends in 1980 after which competition and efficiency dominated infrastructure regulation. Since 2005, there has been a sharp revival of interest in affordability in regulated industries and the paper concludes with some observations on the historical record and comparisons with recent years.