INTRODUCTION

As the previous chapter described, infrastructures are critical for the functioning of modern society as well as the key to successful social change such as, for instance, a transition to a low-carbon sustainable future for most of the world's economies. In the context of a multitude of discrete and autonomous transactions in relation to infrastructures involving both heterogeneous actors and principals at multiple levels or arenas, hybrid constellations of public and private actors and technological developments, critical infrastructures have become ‘systems of systems’ (Sajeva 2006; Larouche 2008).

The first stage of regime change focused on ‘Type I’ market failures, which implies ‘trimming the fat’ of the former monopolist as well as enhancing affordability and choice for the consumer. Whereas the processes of regime change adequately address a ‘Type I’ market failure, the potential for ‘Type II’ market failures, that threaten to lead to public value failure in which broader, long-term interests such as the longer-term reliability, the accessibility of the networks and innovation are at stake, has been largely disregarded. This, in turn, may require a strategic policy framework for the institutional arrangements of infrastructure provision in order to establish a stable long-term framework for infrastructure investments, which properly allocates costs and risks as well as rewards and responsibilities to the various actors involved. This focus restores the balance between the short-term efficiency-based approach engendered by the first stage of regime change and has characterised the majority of infrastructures in the Netherlands to date and longer-term societal values.

This chapter commences with a description of the role of infrastructures in facilitating and pushing spatial, economic and social development in section 2.2. In section 2.3, the specific features of investment in infrastructures are enumerated, followed by an assessment of the process of regime change in section 2.4. In section 2.5, five modes of regime change are distinguished, namely liberalisation, privatisation, unbundling, corporatisation and internationalisation. The analysis in section 2.6 shows that regime change is never completed and in continuous transition. Subsequently, the difference between function and governance in infrastructures are highlighted in section 2.7. Regime change takes place in both dimensions, albeit not to the same degree and at the same pace. We conclude this chapter with two major consequences of the process of regime change: investment in infrastructures increasingly takes place in a multiple actor- and multi-level context (section 2.8).