At the same time that strong structural determinants promote industry concentration, a new set of utility management objectives has emerged with values quite different from those of the past. Historically, utility management placed great emphasis on adequate and reliable service. To be successful in the new world of substantial deregulation and tight oligopoly, new goals and actions now dominate. These include targeting the most attractive markets, striking early and hard to capture or retain market share, closely monitoring the actions of rivals, and achieving the requisite size and mix of services. In this new setting, there is also a recognition that the long-term viability of the firm is no longer assured by regulation and that failure to achieve these goals could result in its eventual demise.
Management can employ various pricing strategies to assure success in a deregulated environment.
It can introduce low, limit-entry prices to foreclose rivals and retain preferred customers. It can impose high access prices to foreclose rivals or make the cost of entry extremely high. In addition, it can adopt a policy of conscious parallelism where one firm acts as a price leader to establish uniform prices for the industry that sustain acceptable levels of profitability. Such price leadership can be eroded, of course, by the bargaining power of big buyers, so that the actual price structure represents a mixture of conscious parallelism and selective or secret concessions to large users. At the same time, management strategies under tight oligopoly will introduce marketing and investment programs that promote concentration.