The Institutional Foundations of Regulatory Commitment in the UK: The Case of Telecommunications

This paper tries to solve the following puzzle. Given that UK governments have, in principle, so much administrative discretion, how were the Conservative governments of the 1980s able to privatize the telecommunications, electricity, water, gas, and airport sectors so prone for administrative expropriation? The answer resides in the subtle use of processes and other institutional arrangements that limit regulatory discretion. We model these processes and contrast the workings of our model to the evolution of regulation in te UK telecommunications sector. Under simple assumptions about preferences of the relevant players, the model is consistent with the evolution of telecommunications regulation.