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Economics and the development of system operators in infrastructure industries

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  • Cave, Martin
  • Stern, Jon

Abstract

This paper discusses the role of system operators (SOs) in four infrastructure industries: electricity, natural gas, railways and water supply. It describes the types of system operator and their role as co-ordinating entities. The paper relates the role of SOs to the problems of economic discrimination that arise in partially or wholly vertically integrated infrastructure companies and the introduction of upstream competition over networks. The paper discusses short, medium and long-term issues that arise and indicates the relevant economic theory framework for tackling each of them as well. It also discusses the SO variants observed for the four industries in the UK, the US and the European Union, with their strengths and weaknesses.

Suggested Citation

  • Cave, Martin & Stern, Jon, 2013. "Economics and the development of system operators in infrastructure industries," Utilities Policy, Elsevier, vol. 26(C), pages 56-66.
    • Handle: RePEc:eee:juipol:v:26:y:2013:i:c:p:56-66
    DOI: 10.1016/j.jup.2013.06.001
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    References listed on IDEAS

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    1. Paul L. Joskow, 2008. "Lessons Learned from Electricity Market Liberalization," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 9-42.
    2. Beard, T Randolph & Kaserman, David L & Mayo, John W, 2001. "Regulation, Vertical Integration and Sabotage," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 319-333, September.
    3. T. Randolph Beard & David L. Kaserman & John W. Mayo, 2001. "Regulation, Vertical Integration and Sabotage," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 319-333, September.
    4. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    5. repec:aei:rpbook:24881 is not listed on IDEAS
    6. G. B. Richardson, 1971. "Planning versus competition," Europe-Asia Studies, Taylor & Francis Journals, vol. 22(3), pages 433-446.
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    Cited by:

    1. Ibarra-Yunez, Alejandro, 2015. "Energy reform in Mexico: Imperfect unbundling in the electricity sector," Utilities Policy, Elsevier, vol. 35(C), pages 19-27.
    2. Jon Stern, 2015. "Past And Potential Roles Of Electricity System Operators: From Liberalisation To Climate Change Management In Britain," Working Papers EPRG 1502, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Moore, Mark A. & Boardman, Anthony E. & Vining, Aidan R., 2017. "Analyzing risk in PPP provision of utility services: A social welfare perspective," Utilities Policy, Elsevier, vol. 48(C), pages 210-218.
    4. Kury, Theodore J., 2015. "The impact of coordination on wholesale market participation: The case of the U.S. electricity industry," Utilities Policy, Elsevier, vol. 32(C), pages 38-44.

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