The regulation of natural monopolies has been widely investigated in economic literature. Particular emphasis has been placed on the relationship between the regulated firm and the regulator. The present work tries to deal with problems that may arise when there is more than one regulator. In this case, if regulators have different objective functions, inefficiency is likely to arise. The water industry seems to suffer from these kind of problems, indeed, given the local dimension of the industry, there are different levels of regulation with possible divergent interests. The analysis is mainly based on the work of David Baron (1985), who investigated the case of a polluting firm in the electricity industry, regulated by two authorities. In my work, I use a similar model to show how non cooperation amongst agencies regulating a firm in the water industry can lead to inefficient equilibria.
Problemi di Cooperazione fra Agenzie di Regolamentazione: il caso del settore idrico / Bartolini, David. - In: ECONOMIA PUBBLICA. - ISSN 0390-6140. - 2:(2004), pp. 127-139.