Yardstick competition in the English and Welsh water industry Fiction or reality?

Under the terms of the 1989 Water Act, the Office of Water Services (OFWAT) was established and given responsibility for the economic regulation of the English and Welsh water industry. One of the concepts underpinning the new regulatory regime was 'comparative' or 'yardstick' competition. This paper presents the results of research, conducted using fieldwork methods, into the place of yardstick competition as a regulatory device for the industry. A new qualitative database, based on interviews conducted with leading industry officials during 1992, is used to analyse the institutional origins and development of a system of regulation based on the idea of yardstick competition.