The economics of self-regulation under Sunset legislation in telecommunications

Abstract

The adequate path of regulation in a dynamic market is one major chal-lenge for the free and innovative development of markets, in particular if these markets need regulation after the privatization of a former monopo-list. This is the case in network industries such as the telecommunication sector; the regulatory needs change permanently. As a radical change of the regulatory regime could cause negative effects to a market as a whole, the objective is to find a transitory regime which limits regulatory errors and is thus more efficient. One way could be to combine the regulatory instruments of sunset-legislation and self-regulation. Conditions for successful self-regulation under sunset legislation are discussed. It seems obvious that a fast moving market such as the telecommunications sector may well be a subject to such an innovative regulatory regime.