Advanced Search
MyIDEAS: Login to save this article or follow this journal

Testing for cross-subsidisation in the combined heat and power generation sector: A comparison of three tests

Contents:

Author Info

  • Amundsen, Eirik S.
  • Andersen, Per
  • Jensen, Frank

Abstract

In this paper we examine cross-subsidisation among combined heat and power producers in Denmark. Information on stand-alone costs for heat generation allows us to empirically compare the Faulhaber tests, tests with an upper bound on stand-alone costs (the Palmer tests) and the fully distributed cost test (FDC). All tests indicate a substantial amount of cross-subsidisation from heat generation to power generation. It is shown that the FDC test is closer to that of the Faulhaber tests in its results than the Palmer tests. Thus as the Faulhaber tests are considered in the literature to be the theoretically correct tests, the FDC test is shown to be the best approximation for tests of cross-subsidisation for this specific sector.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0140988310002392
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 5 (September)
Pages: 750-757

as in new window
Handle: RePEc:eee:eneeco:v:33:y:2011:i:5:p:750-757

Contact details of provider:
Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: Combined heat and power Cross-subsidisation Faulhaber test Palmer test FDC test;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Sherman, Roger, 1983. "Pricing behavior of the budget-constrained public enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 4(4), pages 381-393, December.
  2. von der Fehr, N-H.M. & Amundsen , E.S. & Bergman, L., 2005. "The Nordic Market: Signs of Stress?," Cambridge Working Papers in Economics 0525, Faculty of Economics, University of Cambridge.
  3. Kenneth C. Baseman, 1981. "Open Entry and Cross-Subsidization in Regulated Markets," NBER Chapters, in: Studies in Public Regulation, pages 329-370 National Bureau of Economic Research, Inc.
  4. Bogetoft, Peter & Nielsen, Kurt, 2008. "DEA based auctions," European Journal of Operational Research, Elsevier, vol. 184(2), pages 685-700, January.
  5. Jorg Borrmann & Klaus Zauner, 2004. "Cross-subsidization when Firms Are Allowed to make Non-zero Profits," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 11(2), pages 241-247.
  6. Brennan, Timothy J, 1990. "Cross-Subsidization and Cost Misallocation by Regulated Monopolists," Journal of Regulatory Economics, Springer, vol. 2(1), pages 37-51, March.
  7. Eirik S. Amundsen & Lars Bergman, 2002. "Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 73-95.
  8. Faulhaber, Gerald R, 1975. "Cross-Subsidization: Pricing in Public Enterprises," American Economic Review, American Economic Association, vol. 65(5), pages 966-77, December.
  9. Amundsen, Eirik S. & Bergman, Lars, 2006. "Why has the Nordic electricity market worked so well?," Utilities Policy, Elsevier, vol. 14(3), pages 148-157, September.
  10. Lindsay, Cotton M, 1976. "A Theory of Government Enterprise," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1061-77, October.
  11. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, December.
  12. Palmer, Karen, 1991. "Using an upper bound on stand-alone cost in tests of cross subsidy," Economics Letters, Elsevier, vol. 35(4), pages 457-460, April.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:33:y:2011:i:5:p:750-757. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.