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Competition and Access in Electricity Markets: ECPR, Global Price Cap, and Auctions

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Author Info
Marcel Boyer ()
Jacques Robert ()

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Abstract

In this paper, we first review in this paper some general principles and fundamental facts and issues which remain at the heart of the movement towards deregulation, restructuring and privatization in network industries in general and in the electricity industry in particular. We then proceed with a discussion of a set of basic procedures through which competition can be introduced in electricity markets, that is the access pricing rules. We compare the efficient component pricing rule with the Ramsey-Boiteux pricing rule and we discuss the global price cap rule. We finally discuss some real world experiences (UK and Canada) and we present some recent ideas on network access auctions as a possible approach to increasing competition with soft or light-handed regulation. We conclude by raising some issues which have been relatively neglected but remain nevertheless important.

Dans cet article, nous passons d'abord en revue certains principes, faits et enjeux pertinents aux mouvements de déréglementation, de restructuration et de privatisation dans les industries-réseaux en général et au secteur de l'électricité en particulier. Nous procédons ensuite à la discussion d'un ensemlbe de mécanismes par lesquels la concurrence peut être développée dans les marchés de l'électrcicité, notamment les règles et les prix d'accès. Nous comparons la règle de tarification efficace des composants et la règle de Ramsey-Boiteux et nous discutons la règle des prix plafonds globaux. Nous présentons ensuite quelques éléments importants des réformes vécues au Royaume-Uni et au Canada. Nous abordons enfin la possibilité que des enchères sur les droits d'accès aux réseaux puissent permettre d'accroître la concurrence en ne0501ntenant qu'une réglementation légère. Nous concluons en rappelant certains enjeux importants0501s négligés dans les débats actuels.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 97s-41.

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Date of creation: 01 Nov 1997
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Handle: RePEc:cir:cirwor:97s-41

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Related research
Keywords: Networks; electricity; deregulation; access pricing; Réseaux; électricité; déréglementation; droits d'accès;

References listed on IDEAS
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  1. Armstrong, M. & Doyle, C. & Vickers, J., 1995. "The Access Pricing Problem: A Synthesis," Discussion Paper Series In Economics And Econometrics 9532, Economics Division, School of Social Sciences, University of Southampton.
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  2. Branco, Fernando, 1995. "Multi-object Auctions: On the Use of Combinational Bids," CEPR Discussion Papers 1216, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Creating Competition through Interconnection: Theory and Practice," Journal of Regulatory Economics, Springer, vol. 10(3), pages 227-56, November.
  4. Cramton, Peter C, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 4(2), pages 267-343, Summer.
    Other versions:
  5. Nicholas Economides & Lawrence J. White, 1997. "Access and Interconnection Pricing: How Efficient is the Efficient Component Pricing Rule?," Industrial Organization 9701003, EconWPA. [Downloadable!]
    Other versions:
  6. Jean-Jacques Laffont & Jean Tirole, 1994. "Access Pricing and Competition," Working papers 94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  7. Frank A. Wolak & Robert H. Patrick, 2001. "The Impact of Market Rules and Market Structure on the Price Determination Process in the England and Wales Electricity Market," NBER Working Papers 8248, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. McMillan, John, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-62, Summer. [Downloadable!] (restricted)
  9. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
  10. Wilson, Robert, 1979. "Auctions of Shares," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 675-89, November. [Downloadable!] (restricted)
  11. Robert J. Weber, 1981. "Multiple-Object Auctions," Discussion Papers 496, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  12. Denton, Michael J. & Rassenti, Stephen J. & Smith, Vernon L., 2001. "Spot market mechanism design and competitivity issues in electric power," Journal of Economic Behavior & Organization, Elsevier, vol. 44(4), pages 435-453, April. [Downloadable!] (restricted)
  13. Vickers, John, 1995. "Competition and Regulation in Vertically Related Markets," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 1-17, January. [Downloadable!] (restricted)
  14. Doucet, Joseph A. & Heyes, Anthony G., 1997. "Restructuring of Ontario's electricity supply system: an analysis of the proposals," Utilities Policy, Elsevier, vol. 6(4), pages 271-281, December. [Downloadable!] (restricted)
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  15. Marcel Boyer, 1995. "La réglementation incitative," CIRANO Papers 95c-01, CIRANO. [Downloadable!]
  16. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790.
  17. Boyer, M. & Lasserre, P. & Mariotti, T. & Moreaux, M., 1998. "Industry Development under Alternative Market Structures," Papers 98.497, Toulouse - GREMAQ.
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