IDEAS home Printed from https://ideas.repec.org/a/bla/ausecr/v24y1991i2p32-44.html
   My bibliography  Save this article

Should a ‘Natural Monopolist‘ Be Subject to Competition?: With Special Reference to Cellular Mobile Telephone Services in Australia

Author

Listed:
  • Yew‐Kwang Ng

Abstract

The argument against competition based on natural monopoly is questioned. A true natural monopolist needs no protection. Rapid product innovation and technical advance render the telecommunications industry not a natural monopolist. Telephones may involve two sources of external benefits: benefits to callers and benefits to receivers. Neither source justifies treating country areas more favourably since the access externality also applies, probably with larger magnitudes, to metropolitan areas. The Cellular Mobile Telephone Service (CMTS) involves the use of parts of the radio frequency spectrum. The spectrum should be treated as a scarce resource. Competitive bidding is probably the most efficient method of allocation if the whole spectrum is to be reallocated. However, with only a small band allocated to CMTS, auctioning need not be the most efficient outcome though it is better than maintaining its monopolised usage. Even if competition results in a higher cost initially, the gain in dynamic efficiency can offset this initial loss. A minimum estimate of the benefits to the public of introducing competition in CMTS gives a present value of $2.4 billion.

Suggested Citation

  • Yew‐Kwang Ng, 1991. "Should a ‘Natural Monopolist‘ Be Subject to Competition?: With Special Reference to Cellular Mobile Telephone Services in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 24(2), pages 32-44, April.
    • Handle: RePEc:bla:ausecr:v:24:y:1991:i:2:p:32-44
    DOI: 10.1111/j.1467-8462.1991.tb00387.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8462.1991.tb00387.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-8462.1991.tb00387.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yew‐Kwang Ng, 1987. "Equity, Efficiency and Financial Viability: Public‐Utility Pricing with Special Reference to Water Supply," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 20(3), pages 21-35, September.
    2. John J. Beggs, 1981. "The Demand for Telephone Services in Australia and the Welfare Implications of Alternative Pricing Policies," Cowles Foundation Discussion Papers 584, Cowles Foundation for Research in Economics, Yale University.
    3. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sang‐Ho Lee & Hae‐Shin Hwang, 2003. "Partial Ownership For The Public Firm And Competition," The Japanese Economic Review, Japanese Economic Association, vol. 54(3), pages 324-335, September.
    2. Edwards, Geoff W., 2012. "The Desalination Plant, The North-South Pipeline And The Welfare Of Melburnians," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124292, Australian Agricultural and Resource Economics Society.
    3. Zhang, Le-Yin, 2004. "The Roles of Corporatization and Stock Market Listing in Reforming China's State Industry," World Development, Elsevier, vol. 32(12), pages 2031-2047, December.
    4. Sumit K. Majumdar, 2008. "Why Privatize? The Decline of Public Ownership in India and its Impact on Industrial Performance," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 9(2), pages 293-336, September.
    5. Bel Germà & Fageda Xavier & E. Mildred, 2014. "Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services," Public administration issues, Higher School of Economics, issue 3, pages 103-140.
    6. SangHyun Cheon & Dong-Wook Song & Sungjin Park, 2018. "Does more competition result in better port performance?," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(3), pages 433-455, September.
    7. Baltagi, Badi H. & Yen, Yin-Fang, 2014. "Hospital treatment rates and spillover effects: Does ownership matter?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 193-202.
    8. Anastassios Gentzoglanis, 2002. "Privatization, Investment and Efficiency in the Telecommunications Industry: Theory and Empirical Evidence from MENA Countries," Working Papers 0230, Economic Research Forum, revised 10 Oct 2002.
    9. Germa Bel & Anton Costas, 2006. "Do Public Sector Reforms Get Rusty? Local Privatization in Spain," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 1-24.
    10. Kira Boerner, 2004. "The Political Economy of Privatization: Why Do Governments Want Reforms?," Working Papers 2004.106, Fondazione Eni Enrico Mattei.
    11. Héctor G. González Padilla, 2009. "La privatización de bancos públicos provinciales en Argentina en 1993-2001," CEMA Working Papers: Serie Documentos de Trabajo. 401, Universidad del CEMA.
    12. Decker, Christopher & Chiambaretto, Paul, 2022. "Economic policy choices and trade-offs for Unmanned aircraft systems Traffic Management (UTM): Insights from Europe and the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 157(C), pages 40-58.
    13. N.F. Cruz & R.C. Marques & A. Marra & C. Pozzi, 2014. "Local Mixed Companies: The Theory And Practice In An International Perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 1-9, March.
    14. Crafts, Nicholas, 2019. "Persistent Productivity Failure in the UK: Is the EU Really to Blame?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 247, pages 10-18, February.
    15. repec:ebl:ecbull:v:12:y:2008:i:21:p:1-9 is not listed on IDEAS
    16. Vladimir Bersenyov, 2017. "The Processes of Denationalization and Privatization in Russia in the 1990s. Part 1," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 342-354.
    17. Kazuhiro Ohnishi, 2014. "Sequential Mixed Competition with a Foreign Joint-stock Firm," International Journal of Social Sciences and Management Studies (IJSSMS), The Economics and Social Development Organization (TESDO), vol. 1(2), pages 38-52, June.
    18. Crafts, Nicholas, 2012. "Creating Competitive Advantage: Policy Lessons from History," CAGE Online Working Paper Series 91, Competitive Advantage in the Global Economy (CAGE).
    19. Orietta DESSY & Massimo FLORIO, 2004. "Workers' earnings in the UK before and after privatisation: a study of five industries," Departmental Working Papers 2004-13, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    20. Janusz A. Ordover & Russell W. Pittman & Paul Clyde, 1994. "Competition policy for natural monopolies in a developing market economy1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(3), pages 317-343, September.
    21. Bottasso, Anna & Conti, Maurizio, 2003. "Cost Inefficiency in the English and Welsh Water Industry: An Heteroskedastic Stochastic Cost Frontier Approach," Economics Discussion Papers 8872, University of Essex, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausecr:v:24:y:1991:i:2:p:32-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/mimelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.