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Competition and Regulation Times Headlines

26 November 2001

Media notice For immediate release

Attention: News Editors

The November issue of “Competition and Regulation Times” the newsletter of the Institute for the Study of Competition and Regulation (ISCR) newsletter contains topical articles that will be of interest to various media. These are highlighted below.

Two stories deal with health issues.

ISCR researcher Bronwyn Howell looks at the myriad of nested contracts, both implicit and explicit, that make up the National Cervical Screening Programme. She concludes that the inadequacies of the programme may be endemic and the fundamental problems identified apply to the provision of all health services in New Zealand. She also says that the Ministerial Inquiry into the design of the programme did not address the inability of any of the contracts to align the incentives of any of the agents with the patients.

The economics of whistle-blowing and why it is important for maintaining quality in the health sector are discussed by Victoria University MBA student Lisa Marriot. She says whistle-blowing is particularly important in the New Zealand health sector because of the lack of contractual mechanisms for prescribing the quality of service provided. What’s more, the extreme motivation required by people to “blow the whistle” means that the extent of substandard practices discovered is likely to be only the tip of the iceberg.

Genetic modification
For New Zealand to reap the huge potential benefits of biotechnology, there must be a regulatory and legal environment with appropriate incentives for the development and use of genetically modified organisms. Professor Neil Quigley, Pro Vice Chancellor (Commerce and International) and Professor of Economics at Victoria University of Wellington, writes that a key component of the legal environment is the liability regime for firms that undertake GM research. He says liability rules provide incentives to invest in precautions and to adjust the amount of potentially hazardous activity to the socially optimal level.

In the wake of the electricity crisis vertical integration is one means to hedge against generator and energy retailer risk, according to Richard Mead, director of Cognitus Advisory services Limited. He says that the recent rally in wholesale energy prices in the relatively young New Zealand electricity market heated up the ongoing debate about the desirability of electricity generators being vertically integrated with energy retail companies.

Senior Fellow in the Economic Studies Program of the Brookings Institution, Washington DC, Robert W Crandall, argues there is no reason to return to regulated telecommunications in New Zealand. Rather, we should find a better way to expedite court reviews of legal issues that affect the sector. He says it would be naïve of the Government to impose North American/European style regulation on the telecom sector purportedly to ensure that competition develops.

Copies of the newsletter are available from:
New Zealand Institute for the Study of Competition and Regulation
PO Box 600
Telephone: 0-4-463 5562

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