Utility price regulation and time inconsistency: comparisons with monetary policy
AbstractWe examine the hold-up problem of price regulation and compare it with the monetary policy credibility problem. For both, reputational solutions are possible provided that the policymaker is sufficiently far-sighted, but the hold-up problem in regulation turns out to be more serious than the inflation bias problem in monetary policy. Even with far-sighted regulators, a reputational equilibrium with optimal investment is undermined if capital depreciates slowly and consumer demand increases slowly. These results make the Rogoff-delegation solution to the regulatory commitment problem especially attractive. The paper concludes with a short discussion linking these results to the empirical literature on utility regulatory regimes. Copyright 2005, Oxford University Press.
Download InfoIf 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.
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 InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 57 (2005)
Issue (Month): 3 (July)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dassiou, X. & Stern, J., 2008.
"Infrastructure Contracts: Trust and Institutional Updating,"
08/06, Department of Economics, City University London.
- Xeni Dassiou & Jon Stern, 2009. "Infrastructure Contracts: Trust and Institutional Updating," Review of Industrial Organization, Springer, vol. 35(1), pages 171-216, September.
- Flavio M. Menezes & Christian Roessler, 2010.
"Good and Bad Consistency in Regulatory Decisions,"
The Economic Record,
The Economic Society of Australia, vol. 86(275), pages 504-516, December.
- Joanne Evans & Paul Levine & Neil Rickman & Francesc Trillas, 2011. "Delegation to Independent Regulators and the Ratchet Effect," School of Economics Discussion Papers 0911, School of Economics, University of Surrey.
- Joan Ramon Borrell & Juan Luis Jiménez, 2008. "The drivers of antitrust effectiveness," Hacienda Pública Española, IEF, vol. 185(2), pages 69-88, July.
- Montoya, Miguel A. & Trillas, Francesc, 2007. "The measurement of the independence of telecommunications regulatory agencies in Latin America and the Caribbean," Utilities Policy, Elsevier, vol. 15(3), pages 182-190, September.
- Maiorano, Federica & Stern, Jon, 2007.
"Institutions and telecommunications infrastructure in low and middle-income countries: The case of mobile telephony,"
Elsevier, vol. 15(3), pages 165-181, September.
- Maiorano, Federica & Stern, Jon, 2007. "Institutions and Telecommunications Infrastructure in Low and Middle-Income Countries: The Case of Mobile Telephony," Working paper 448, Regulation2point0.
- Trillas, Francesc, 2010.
"Electricity and telecoms reforms in the EU: Insights from the economics of federalism,"
Elsevier, vol. 18(2), pages 66-76, June.
- Trillas, Francesc, 2010. "Electricity and telecoms reforms in the EU: Insights from the economics of federalism," IESE Research Papers D/861, IESE Business School.
- Joanne Evans & Paul Levine & Fransesc Trillas, 2006.
"Lobbies, Delegation and the Under-investment Problem in Regulation,"
School of Economics Discussion Papers
2006, School of Economics, University of Surrey.
- Evans, Joanne & Levine, Paul & Trillas, Francesc, 2008. "Lobbies, delegation and the under-investment problem in regulation," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 17-40, January.
- Paul Levine & Joseph Pearlman & Bo Yang, 2007.
"The Credibility Problem Revisited: Thirty Years on from Kydland and Prescott,"
School of Economics Discussion Papers
1807, School of Economics, University of Surrey.
- Paul Levine & Joseph Pearlman & Bo Yang, 2008. "The Credibility Problem Revisited: Thirty Years on from Kydland and Prescott," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 728-746, 09.
- Perino, Grischa, 2010.
"How delegation improves commitment,"
Elsevier, vol. 106(2), pages 137-139, February.
- Gual, Jordi & Trillas, Francesc, 2006.
"Telecommunications policies: Measurement and determinants,"
IESE Research Papers
D/630, IESE Business School.
- Gual Jordi & Trillas Francesc, 2006. "Telecommunications Policies: Measurement and Determinants," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-24, June.
- Paolo Panteghini & Carlo Scarpa, 2008. "Political pressures and the credibility of regulation: can profit sharing mitigate regulatory risk?," International Review of Economics, Springer, vol. 55(3), pages 253-274, September.
- Ergas, Henry, 2010. "New policies create a new politics: issues of institutional design in climate change policy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), June.
- Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
- Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB).
- Maiorano, F. & Stern, J., 2007. "Institutions and investment in low and middle-income countries: the case of mobile communications," Working Papers 07/06, Department of Economics, City University London.
- Spanjer, Aldo, 2006. "European gas regulation: a change of focus," MPRA Paper 21146, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
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.