Behavior of the Firm Subject to External Regulatory Constraint

Averch, Harvey A.; Johnson, Leland L.

doi:10.7249/p2488-1

Cited by 537 publications

(575 citation statements)

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“…By the 1970s, economists on both sides of the aisle were distancing themselves from the uncritical supporters of government regulation (see Stigler andFriedland 1962 andAverch andJohnson 1962). But, to our knowledge no contemporaneous explanation was provided by the economists in support of the much-vaunted deregulation of the 1970s and 1980s, defined as "vertical separation."…”

Section: Resultsmentioning

confidence: 98%

Deregulation redux: does mandating access to bottleneck facilities necessarily improve welfare?

Higgins¹,

Mukherjee

2009

Public Choice

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We demonstrate that deregulation in the form of vertical separation of network components into natural monopoly and potentially competitive markets does not truly represent a lessening of regulatory burdens. That is, vertical separation is not synonymous with deregulation; "more competitors" is not equivalent to "more competition". We assume a public interest regulator that is constrained to set a unit price that maximizes expected welfare subject to a break-even constraint. We show that under both symmetric and asymmetric information cases the information demands on the regulator of the vertically integrated system are no greater than those in the case of vertical separation.

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Section: Resultsmentioning

confidence: 98%

Deregulation redux: does mandating access to bottleneck facilities necessarily improve welfare?

Higgins¹,

Mukherjee

2009

Public Choice

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“…20 A second possible reason for inefficiently high prices of energy for regulated utilities comes from the principal-agent problem that regulated utilities may not minimize capital costs on behalf 20 This issue is not restricted to regulated monopolies; utilities facing imperfect retail competition will also diverge from optimal two-part tariffs (Puller and West 2013). of consumers, and these costs cannot be perfectly observed by regulators. Under rate-of-return regulation, utilities may overcapitalize in order to increase profits (Averch and Johnson 1962). This has been confirmed empirically in the context of regulated electric utilities (Spann 1974, 50).…”

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confidence: 79%

Assessing the Energy-Efficiency Gap

Gerarden¹,

Newell²,

Stavins³

2015

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Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but these technologies appear not to be adopted by consumers and businesses to the degree that would apparently be justified, even on a purely financial basis. We present two complementary frameworks for understanding this so-called "energy paradox" or "energyefficiency gap." First, we build on the previous literature by dividing potential explanations for the energy-efficiency gap into three categories: market failures, behavioral anomalies, and model and measurement errors. Second, we posit that it is useful to think in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices costminimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We review empirical evidence on these questions, with an emphasis on recent advances, and offer suggestions for future research.

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“…La réglementation des monopoles est en général représentée par le modèle classique d 'Averch et Johnson (1962). Il y a eu certaines extensions de ce modèle dans le domaine de l'incertitude 16 dont les résultats diffèrent, dans certains points importants, de ceux de l'analyse initiale.…”

Section: Le Monopole Réglementé Sous Incertitudeunclassified

Les contributions de la théorie financière à la solution de problèmes en organisation industrielle et en microéconomie appliquée

Perrakis

1989

L'Actualité économique

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Behavior of the Firm Subject to External Regulatory Constraint

Cited by 537 publications

References 0 publications

Deregulation redux: does mandating access to bottleneck facilities necessarily improve welfare?

Deregulation redux: does mandating access to bottleneck facilities necessarily improve welfare?

Assessing the Energy-Efficiency Gap

Les contributions de la théorie financière à la solution de problèmes en organisation industrielle et en microéconomie appliquée

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