Efficient and sustainable regulation and competition in network industries

Completed

Not Energy Related
Other Power and Storage Technologies(Electricity transmission and distribution)
Other Cross-Cutting Technologies or Research(Environmental, social and economic impacts)

Basic and strategic applied research

SOCIAL SCIENCES (Economics and Econometrics)

Sociological economical and environmental impact of energy (Policy and regulation)
Sociological economical and environmental impact of energy (Other sociological economical and environmental impact of energy)

Professor DMG Newbery
Economics
University of Cambridge

Standard

ESRC

01 April 2000

31 March 2003

36 months

£316,588

No relevance to Underpinning Sectors

East of England

ESRC Electricity

Professor DMG Newbery, Economics, University of Cambridge

Objectives not supplied

Networked industries have attributes that make the design of appropriate regulation problematic, with consequences for competition. Market rules and the form of regulation influence the choices and strategies of agents using the network, while the network itself places constraints on the number and location of agents who connect. The proposal consists of two complementary parts. First, the design of efficient regulation for natural monopoly networks will be addressed by analysing distortions inRPI-X regulation and measuring the value of information available to the regulator. The researchers will consider the problems introduced by separate regulation of capital and operating expenditure, determinates of efficiency of regulated firms, and the possibilities for setting price caps using techniques based on benchmarking whereby the X factor is set according to an independent measure of productivity. A mixture of industry case studies, international comparisons, and specific modellingtechniques will be used. Second, competition over networks will be examined, concentrating on the internet / telecom and electricity industries. Game theoretic modelling, case studies, and empirical analysis will be combined to ask how competition and efficiency are affected by ownership structures, network access, regulatory approaches and market designs

27/10/11