TILEC Seminar: Sean Ennis
Title: The Natural Monopoly Paradox: Incumbent Inefficiency and Entry
In principle, a 'natural' monopoly exists when a single firm has the lowest cost structure for production. This paper shows that a paradox arises for certain infrastructure and delivery products that satisfy a widely accepted technical definition for such monopolies. Under well-specified conditions, total costs can be reduced after the entry of a competitor. This finding matters because special state benefits, such as protection against entry or direct subsidies, are provided to firms meeting the criteria. An alternative definition of natural monopolist is proposed that removes the counter-intuitive result. Plausible boundary conditions are derived for entry to reduce total costs. These conditions suggest: (i) In infrastructure sectors, new investments should not be allocated automatically to natural monopolist incumbents; (ii) In postal delivery, incumbents with low letter volumes least merit state protection, implying an increasing challenge from digitalization.”.
Speaker: Sean Ennis
Currently Director of the Centre for Competition Policy and Professor of Competition Policy at Norwich Business School of the University of East Anglia, Sean Ennis has extensive experience in government work and competition law and policy. Previously, he was a Senior Economist in the Competition Division of the OECD. For two years, he was Executive Director of the Competition Commission of Mauritius, where he was the chief executive in charge of running Mauritius’ independent competition authority. At the OECD he developed and led the development and application of the OECD’s Competition Assessment Toolkit. Prior to that, he worked as an economist at the European Commission’s DG Competition and at the U.S. Department of Justice’s Antitrust Division, developing economic analyses for competition law investigations.
Sean has published research studies and reports and provided capacity building related to a broad range of business activities (including digitalisation, communications, health care, financial and professional services). These studies or statements have been submitted to or published by economics journals and organisations such as the G20, the European Parliament, the OECD and the World Bank. He has co-authored or overseen reports for regulatory and government agencies in Australia, Greece, Mexico, Romania, the United Kingdom and the United States. His research interests include competition economics, digitalisation and its impacts on markets, regulated industries and inequality.
Time: 10:45-11:45 hrs
Host and moderator: Konrad Borowicz