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The bigger issue is that power appears to be over-regulated-- there is a single government monopoly provider, so when that provider went offline all was lost.
by newbie12 14y ago
The bigger issue is that power appears to be over-regulated-- there is a single government monopoly provider, so when that provider went offline all was lost.
- yk 14y agoThe power grid ( as the fiber grid) is a natural monopoly. The reason is, that it costs $x to get to n costumers. The second guy needs also $x to build his grid, but can only expect n/2 customers. ( Or he has some great trick to get all of the customers, but then one monopoly is just replaced by another.) Additionally infrastructure has the strong tendency to externalize costs. In the example of the posting, the power company has somewhat lower income ( and needs to repair its grid), but actually damages are spread all over the place, like the guy who has to firesale his pizza before the ingredients are bad. So for the utility company it makes sense to just go for 99% reliability and insure some downtime, but on a larger level the total damages incurred for the economy will not be insured. Infrastructure is therefore a case, where the problem is not over regulation, since we deal with a monopoly anyhow. The problem is that at best wrong regulation. ( Assuming the power outage was not caused by some freak accident.)
- joshuahedlund 14y agoPower grids tend to have the properties of a natural monopoly, but note that power itself does not (ex. solar panels). The challenge is to regulate the existing monopoly in ways that do not discourage innovation in providing the more general end service that is not a monopoly.