Affiliations: Senior Economist, Infrastructure Unit, East and Pacific Region, The World Bank, Washington, DC, USA
Note: [] Consultant, South Asia, Public Private Infrastructure Advisory Facility, New Delhi, India. All views are personal.
Abstract: Competition, unlike regulation, is a decentralized process where individual service providers, driven by the profit motive, compete with each other to provide services to consumers. And unlike competition, regulation is a centralized process that makes decisions about tariffs, quality standards, and investments. Where full-fledged competition is not possible, regulation is considered to be a surrogate. Recent changes in technology and economic thinking have spurred competition in traditionally monopolistic infrastructure sectors. However, the line between regulation and competition issues and functions is becoming blurred as utility regulators, along with their competition counterparts, are increasingly being given the mandate for promoting competition in their sectors. This creates a potential overlap between utility regulators and competition regulators. In this paper, we discuss institutional approaches to utility regulation and competition regulation in South Asia, compare them with approaches adopted in other regions, and find that there are no definite approaches being observed across the countries in the region, or even across sectors within a country in the South Asia region. Given the nascent stage of development of competition authorities in the region, policy-makers, in addition to the regulatory functions, have assigned the ‘competition function’ to utility regulators in infrastructure sectors. Consequently, there exist potential areas of overlap between these two types of institutions, which need to be addressed.
