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A Critique Of Light-Handed Regulation: The Case Of British Gas February 1999, Paul Carpenter, Carlos Lapuerta

Northwestern Journal of International Law & Business

Although attractive in theory, the implementation of light-handed regulation in the United Kingdom has faced several problems. First, light-handed regulation has not worked as anticipated to avoid the need for lengthy regulatory proceedings. Second, light-handed regulation has unintentionally created inefficient incentives for regulated companies. Third, light-handed regulation has not successfully constrained the monopoly power of incumbents. We illustrate the problems with light-handed regulation principally by reference to the experience of British Gas. The British government established the Office of Gas Regulation, known as Ofgas, to regulate British Gas after its privatization. However, Ofgas was not able to set reasonable prices …