Regulatory Reform and Industrial Restructuring: The Cases of Water, Gas, and Electricity in Italy

Abstract

Regulatory reforms are often made and implemented with the aim to introduce some competitive mechanisms in infrastructure industries which were previously regulated through public ownership. The impact of these reforms on the structure and performance of infrastructure industries, however, may not deliver the expected improvements. This paper aims to address this issue by analysing and discussing the regulatory reforms and the industrial restructuring which took place in the water, the gas, and the electricity sectors in Italy in the last about 15 years. This paper contrasts and compares these reforms in terms of economic regulatory institutions, tariff setting mechanisms, territorial organisation of the services, degree of involvement of the private sector, and degree of industrial restructuring. The impact of these reforms is assessed along the dimensions of degree of openness to new entrants, concentration of the industry, tariffs, and investments. On the whole these reforms resulted in relatively modest achievements in terms of competitive pressures and their effects on industry performance are still to be fully realised. Conclusions are drawn with respect to the need for further steps in the liberalisation and re-regulation of infrastructure industries at both the national and the EU levels.