What sector regulations are appropriate for a fast-changing telecommunications industry? The economist’s answer is often deregulation: absent monopoly power, it is hard to justify regulatory control of a market in which customers are in a position to make their own choices. Introducing regulation opens the door for industry players to push for rules that hinder competition and for political actors to design regulation to benefit cronies and distort markets. But sometimes deregulation isn’t an option: laws may not grant regulators enough discretion and it may be difficult to build political coalitions to change those laws. What can be done in such situations? Ghana is providing an example with its use of “adaptive regulation,” an approach that allows the industry and the regulator to co-evolve in a customer-driven system.
Read “Adaptive regulation: Africa finds a third way on telecom regulation” on AEI.