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The role of governmental commitment on regulated utilities

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  • De Meio Reggiani, Martin C.
  • Vazquez, Miguel
  • Hallack, Michelle
  • Brignole, Nélida B.

Abstract

Regulation is generally interpreted as a relational contract between governments and private companies. Besides, regulation plays either a positive or a negative role in infrastructure development. This article is intended to understand the hindrance to stable policies in the regulation of network infrastructures. An original model where governments have a conflictive relationship with regulated companies was developed. The governmental opportunistic behaviour, which undermines the regulatory independence, was introduced in an infinitely repeated game. By including this variation, the hold-up problem can be modelled since a time inconsistency may occur. The model was illustrated using past-decade events about the Argentinean transport network of natural gas, proposing a possible reason for the triggering of a sustained hold-up.

Suggested Citation

  • De Meio Reggiani, Martin C. & Vazquez, Miguel & Hallack, Michelle & Brignole, Nélida B., 2019. "The role of governmental commitment on regulated utilities," Energy Economics, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:eneeco:v:84:y:2019:i:c:s014098831930307x
    DOI: 10.1016/j.eneco.2019.104518
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    References listed on IDEAS

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