The effects of average revenue regulation on electricity transmission investment and pricing
AbstractThis paper investigates the long-run effects of average revenue regulation on an electricity transmission monopolist who applies a two-part tariff comprising a variable congestion price and a non-negative fixed access fee. A binding constraint on the monopolist's expected average revenue lowers the access fee, promotes transmission investment, and improves consumer surplus. In a case of any linear or log-linear electricity demand function with a positive probability that no congestion occurs, average revenue regulation is allocatively more efficient than a Coasian two-part tariff if the level of capacity under average revenue regulation is higher than that under a Coasian two-part tariff.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 30 (2008)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/eneco
Other versions of this item:
- Isamu Matsukawa, 2005. "The Effects of Average Revenue Regulation on Electricity Transmission Investment and Pricing," Industrial Organization 0512009, EconWPA.
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