Consumer sovereignty is frequently used as an argument in favor of not regulating markets and leaving consumers free to chose and reveal their preferences.
However, in some cases, for example, when a regulator sets a requirement of universal access or service obligation, deregulation can mean less options (not more) to choose for consumers.
So, in some cases, relaxing regulatory obligations (particularly in basic services like water, energy or communications) can undermine rather than increase consumer sovereignty. Am I right?
For consumers, universal access is important or many of us will find ourselves unserved. I've experienced that with the cable/internet industry - the telecom president told me publicly to move to get the service I need. The cable company skipped our portion of the main back road, selecting an off branch to provide the last of its available cable and says it will do no further investment. Those of us left behind are only 2 miles from the major interstate but both cable and telecom skipped us. There is more population per mile in the unserved area than in much of the served area. We'd like to have real choices. All we have is expensive and limited satellite and wireless internet. If all providers had a requirement to serve all in an area, we wouldn't be left behind. Clearly, we did not learn the lessons of electricity and are repeating them as we expand other utilities. Our children cannot use the internet to learn, we don't have access to some forms of health care, and we cannot afford to work at home or have a home based business dependent upon the internet. Houses in the nice subdivision between me (I've lived there 30 years and the house was built in 1797) and the interstate are more difficult to sell because they lack "real" internet service.
Thank you Irene. Certainly, Internet and telecom services have become a vehicle of accessing to many other services. So, in these cases, lassez faire policy (no regulation of universal service) could reduce rather than increase the consumers' freedom to chose.
Dear Gonzalo, I definitely agree with your observation. One of the biggest limitations that we face in business research is that we work on assumptions about the underlying mechanisms of markets without investigating how markets really work. For example, the concept of competition is often described as a fundamental characteristic of free markets, but if we study how industrial markets work we see that competition is not a crucial aspect of those markets; instead, the crucial aspects are interdependences and networks.
I would like to point you to my own research where I describe the working assumptions and theories of markets, and how these assumptions shape how we understand how markets work. You can find links to published work on my profile
Thank you Carlos. I will review your publications and hopefully provide some feedback. Regarding your comment; I agree with you: it is very common to see how economists assume that competition (and efficiency) is an automatic consequence of deregulation. In the same way, in some cases the assumption that derregulation could bring the consumers more freedom to chose could be an error, not only in the case of utilities or public services, but also in small and imperfect markets in which barriers to entry are significant.
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