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Adaptability of competitive electricity reforms a modular analysis

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  • Dubois, Ute
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    Abstract

    Among the competitive electricity reforms that have been implemented in Europe and the US for the last 18 years, none has "survived" over several years without major changes. Their changing nature raises the question of their adaptability. Two characteristics of reforms play a key role on their adaptation properties. Firstly, they are "modular" objects in the sense of [Baldwin, C., 2008. Where do transactions come from? Modularity, transactions, and the boundaries of firms. Industrial and Corporate Change 17 (1), 155-195]. Secondly, they are produced in an institutional process which leads to "incomplete" rules and designs [Pistor, K., Xu, C., 2003. Incomplete law. International Law and Politics 35, 931-1013]. We propose a typology of adaptations based on the framework proposed by [Williamson, O.E., 1991. Comparative economic organization: the analysis of discrete structural alternatives. Administrative Science Quarterly 36 (2), 269-296] for contracts: (1) in case of small disturbances, adaptations are realized quasi-automatically, by autonomous decisions of the institutions governing the implementation of reforms; (2) in case of middle-range disturbances, adaption is made by Coasian bargaining; (3) finally, in case of strong disturbances, or when bargaining is not feasible, the adaptation of reforms is in the hands of legislative and executive institutions [North, D.C., 2005. Le processus du dveloppement conomique. Editions d'Organisation]. These institutions can reform the reforms [Joskow, P.L., 2006. Introduction to electricity sector liberalization: lessons learned from cross-country studies. In: Sioshansi, F.P. (Ed.), Electricity Market Reform: An International Perspective. Elsevier, Amsterdam, pp. 1-32; Hogan, W.W., 2002. Electricity market restructuring: reforms of reforms. Journal of Regulatory Economics 21, 103-132]. The role of these types of adaptations in each electricity reform is a consequence of the allocation of rights to the regulator, to stakeholders and to legislative and executive institutions.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 37 (2009)
    Issue (Month): 4 (April)
    Pages: 1213-1221

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    Handle: RePEc:eee:enepol:v:37:y:2009:i:4:p:1213-1221

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    Web page: http://www.elsevier.com/locate/enpol

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    Keywords: Electricity reform Modularity Institutional dynamics;

    References

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    1. Hogan, William W, 2002. "Electricity Market Restructuring: Reforms of Reforms," Journal of Regulatory Economics, Springer, vol. 21(1), pages 103-32, January.
    2. Glachant, Jean-Michel & Dubois, Ute & Perez, Yannick, 2008. "Deregulating with no regulator: Is the German electricity transmission regime institutionally correct?," Energy Policy, Elsevier, vol. 36(5), pages 1600-1610, May.
    3. Vincent Rious & Jean-Michel Glachant & Yannick Perez & Philippe Dessante, 2008. "The Diversity of Design of TSOs," Working Papers 0805, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
    4. Nils-Henrik M. von der Fehr, Eirik S. Amundsen and Lars Bergman, 2005. "The Nordic Market: Signs of Stress?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 71-98.
    5. Masahiko Aoki, 2001. "Toward a Comparative Institutional Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011875.
    6. Andres, Luis & Guasch, Jose Luis & Azumendi, Sebastian Lopez, 2008. "Regulatory governance and sector performance : methodology and evaluation for Electricity distribution in Latin America," Policy Research Working Paper Series 4494, The World Bank.
    7. Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
    8. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    9. Carliss Y. Baldwin, 2008. "Where do transactions come from? Modularity, transactions, and the boundaries of firms," Industrial and Corporate Change, Oxford University Press, vol. 17(1), pages 155-195, February.
    10. Levy, Brian & Spiller, Pablo T, 1994. "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(2), pages 201-46, October.
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    Cited by:
    1. Sueyoshi, Toshiyuki & Goto, Mika & Shang, Jennifer, 2009. "Core business concentration vs. corporate diversification in the US electric utility industry: Synergy and deregulation effects," Energy Policy, Elsevier, vol. 37(11), pages 4583-4594, November.
    2. Mustafa Durakoglu, S., 2011. "Political institutions of electricity regulation: The case of Turkey," Energy Policy, Elsevier, vol. 39(9), pages 5578-5587, September.

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