Naturally monopolistic network industries such as railways, water and sewage, district heating and electricity infrastructure etc. are often subject to economic regulation in order to avoid wasteful duplication and to restrict monopolistic behaviour in the industry. A variety of different regulatory approaches have emerged as a result. The volume of empirical studies on the effects of economic regulation is increasing, yet the application of results to different environments is limited due to very context-based nature of regulatory instruments and interactions. In order to support more active analysis of local circumstances, this paper systematises and presents the institutional framework and practices of economic regulation of network industries in Estonia in a comprehensive manner. The authors analyse the composition of relevant industry sectors, the evolution of legislation and sector-specific regulators. Individual regulated services in different network industries are identified, detailed regulatory practices elaborated on, and volume of regulatory decisions is compiled accordingly.

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Naturally monopolistic network industries are subject to economic regulation to achieve an optimal use of infrastructure and avoid the abuse of monopolistic power. In theory, such intervention leads to a higher allocative and productive efficiency in the industry. Relatively little is known about the results the economic regulation gives in practice and whether it achieves the objectives set. Literature states that due to the context-specific nature of regulatory framework, ex post analysis and practical experiments are necessary to be performed to study the impact of economic regulation on the performance of industries. In this paper, analysis of the impact of economic regulation on the oil shale value chain in Estonia is performed and the results are provided. Based on relevant policy documents, regulatory objectives and targets are identified and indicators compiled to monitor the results. The discussion is presented and recommendations for further research are given.