Klein contends that in case of doubt, policymakers should not restrict the entry of competitive firms in such networks. If they do, he says that entry restrictions should be subject to an automatic test after a set period, and reviewed for costs and benefits. The challenge is to ensure that privatization yields clear benefits. Empirical studies suggest that ownership change by itself will often yield results, especially when it reduces government interference. But the regulation required in areas of natural monopoly can become overly intrusive and undermine progress.
Real competition is required to generate sizable and lasting welfare improvements.
But in infrastructure sectors, the introduction of competition is complicated by the existence of complex transport and communications networks. Debate about whether and how to introduce competition in network industries is sometimes heated. Klein argues that policymakers need to understand how competitive forces can be brought to bear in network industries. Competition for the market, and bidding for franchises. Options for expanding competitive systems by decentralizing investment in new network capacity.