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Network Regulation under electoral competition

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  • Leroux, Anke
  • Söderberg, Magnus

Abstract

Academics and policymakers generally agree that energy infrastructure should be subject to price regulation. More and more critics of modern regulatory approaches, however, point to the apparent failures of these mechanisms to achieve competitive pricing in practice. Some have suggested that customers ought to be involved in the regulatory process, but it is uncertain how customers' perspectives can best be incorporated. In this study, we evaluate how electoral competition influences monopoly pricing by extending well-known regulatory laboratory experiments. We show that electoral competition has a significant and negative impact on prices. This effect disappears when electoral competition is implemented jointly with incentive regulation, implying substitutability rather than complementarity of regulation and electoral competition.

Suggested Citation

  • Leroux, Anke & Söderberg, Magnus, 2023. "Network Regulation under electoral competition," Energy Economics, Elsevier, vol. 120(C).
    • Handle: RePEc:eee:eneeco:v:120:y:2023:i:c:s0140988323001123
    DOI: 10.1016/j.eneco.2023.106614
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    More about this item

    Keywords

    Regulation; Monopoly; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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