ABSTRACT
GOVERNMENTAL CONTEXT OF PRIVATIZATION AND DOMINANT FIRM REGULATION1
Mark Gray
It is an axiomatic principle of modern economics that incentive design largely determines institutional arrangements. In the case of privatization in Britain and the subsequent regulation of dominant firms there is now plentiful evidence that incentive arrangements incorporated in the legislation creating private assets out of public ones have had a significant effect, not only upon the institutional arrangements for monitoring and controlling the uncontested dominant firms which emerged after vesting, but also in changing the character of accountability and government power. It is the general argument of this paper that, in Britain at least, it has been the intention of government to reduce central control and encourage the dissipation of power.
