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The Political Economy Of Deregulation In The U.S. Gas Distribution Market

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  • Vladimir Hlasny

Abstract

Causes and consequences of deregulation and restructuring in utility markets in US states continue to draw heated debate. It is unclear why different utilities choose retail restructuring, price caps or sliding-scale plans. Various economic and political reasons lend themselves to explaining regulatory decisions. This study uses a stylized capture model to formulate predictions about regulators’ net benefits from a particular form of deregulation. Empirical hazard model evaluates the revealed choice at each regulator-utility pair. Among state-level political factors, frequency and timing of commissioner re-elections, system of selection of commissioners, and party composition of the commissions and state legislatures are significant in explaining the pattern of deregulation. Utilities’ prices, capacity and scope of operations help explain the timing of deregulation. Market concentration contributes. A negative significant association between the prevalence of restructuring (and sliding-scale plans), and of price caps across utility industries is identified.

Suggested Citation

  • Vladimir Hlasny, 2010. "The Political Economy Of Deregulation In The U.S. Gas Distribution Market," ICER Working Papers 29-2010, ICER - International Centre for Economic Research.
    • Handle: RePEc:icr:wpicer:29-2010
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    References listed on IDEAS

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    1. Palmer, Karen & Ando, Amy, 1998. "Getting on the Map: The Political Economy of State-Level Electricity Restructuring," RFF Working Paper Series dp-98-19-rev, Resources for the Future.
    2. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
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    More about this item

    Keywords

    gas; deregulation; restructuring; commissioner elections; hazard model;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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