ABSTRACT
Because water is a natural monopoly in the product sense, it is widely agreed that, after privatization, competitive forces will chiefly consist of rivalry for the management of companies. Privatization will create a market for corporate control, in which less efficient management can be replaced by more efficient. Ministers have pointed to its importance on several occasions. A convincing case that this unique contribution of privatization will work well will blunt the inevitable criticism that ‘private monopolies’ are being created. This chapter sets down some thoughts on what policy in this area should be. Its main conclusion is that mergers having the effect of combining the ownership of more than one major water public limited company should be prohibited.
