Alberto Mingardi  

Re-regulation in the UK

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For quite a while, the British electricity market (in itself, an interesting case of successful liberalisation) has been the object of a campaign aiming at its re-regulation.

Now it is the turn of the British Competition & Markets Authority (the antitrust-on-steroids body which ironically resulted from the merger of the Competition Commission and the Office of Fair Trading) to make its proposal. Carlo Stagnaro and Philip Booth report that the CMA considers the electricity markets to be plagued by "over-regulation and low consumer engagement". But to solve the second problem, they may actually aggravate the first going back to what Stagnaro and Booth call "the mother of all regulations: price control, or, to be fair, a softer version thereof".

CMA is proposing a "transitional safeguard regulated tariff" to be introduced, in order to "provide direct protection to disengaged customers". Protecting disengaged consumers may be a praiseworthy goal but I don't quite understand how you can wake them up, by "protecting" them with a special tariff, that is, by decreasing their incentive to get better informed.

Carlo and Philip point out that a similar approach has already been tried: in Italy. Results aren't exciting.


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COMMENTS (1 to date)
Tom West writes:

but I don't quite understand how you can wake them up, by "protecting" them with a special tariff, that is, by decreasing their incentive to get better informed.

I think you've missed one of the most important points about why Libertarianism isn't widely popular. People don't *want* to wake up. What the vast majority want is to be able to focus on a few elements that are of direct interest to them, and have 99% of life be taken care of in a 'sensible' way so that they don't have to spend precious attention on it.

One of the biggest elements of attraction to larger government is to produce laws and regulation so that you *don't* have to spend attention on most mundane issues.

The nanny state that Libertarians so fear is often exactly what most voters want. At least until some element that they *do* want to exercise control over is one that most people are happy to hand over to the government.

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