Regulating a Monopoly Offering Priority Service
AbstractThis paper investigates the effects of alternative forms of regulation on the market penetration and capacity, which are determined by a profit-maximizing monopolist providing priority service to consumers. For continuous priority service, a minimum reliability standard, price cap and rate of return regulation lead to larger capacity than in the absence of regulation. A minimum reliability standard reduces the market penetration while price cap and rate of return regulation increase it. The regulatory effects on the market penetration and capacity are also examined for discrete priority service, and policy implications of these effects are discussed for electricity supply industry.
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.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 991.
Date of creation: 17 Nov 2006
Date of revision:
priority service; monopoly; minimum reliability standard; price cap; rate of return regulation;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-ENE-2007-01-14 (Energy Economics)
- NEP-REG-2007-01-14 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joskow, Paul L. & Tirole, Jean, 2007.
"Reliability and Competitive Electricity Markets,"
Open Access publications from University of Toulouse 1 Capitole
http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
- Joskow, Paul L & Tirole, Jean, 2007. "Reliability and Competitive Electricity Markets," CEPR Discussion Papers 6121, C.E.P.R. Discussion Papers.
- Joskow, P. & Tirole, J., 2004. "Reliability and Competitive Electricity Markets," Cambridge Working Papers in Economics 0450, Faculty of Economics, University of Cambridge.
- Paul L. Joskow & Jean Tirole, 2004. "Reliability and Competitive Electricity Markets," NBER Working Papers 10472, National Bureau of Economic Research, Inc.
- Paul Joskow & Jean Tirole, 2004. "Reliability and Competitive Electricity Markets," Working Papers 0408, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Joskow, Paul & Tirole, Jean, 2004. "Reliability and Competitive Electricity Markets," IDEI Working Papers 310, Institut d'Économie Industrielle (IDEI), Toulouse.
- Tan, Chin-Woo & Varaiya, Pravin, 1993. "Interruptible electric power service contracts," Journal of Economic Dynamics and Control, Elsevier, vol. 17(3), pages 495-517, May.
- 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, June.
- Viswanathan, Nagarathnam & Tse, Edison T S, 1989. "Monopolistic Provision of Congested Service with Incentive-Based Allocation of Priorities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(1), pages 153-74, February.
- Woo, Chi-Keung & Horowitz, Ira & Martin, Jennifer, 1998. "Reliability Differentiation of Electricity Transmission," Journal of Regulatory Economics, Springer, vol. 13(3), pages 277-92, May.
- Harris, Milton & Raviv, Artur, 1981. "A Theory of Monopoly Pricing Schemes with Demand Uncertainty," American Economic Review, American Economic Association, vol. 71(3), pages 347-65, June.
- Besanko, David & Donnenfeld, Shabtai, 1988. "Rate of return regulation and product variety," Journal of Public Economics, Elsevier, vol. 36(3), pages 293-304, August.
- Deng, Shi-Jie & Oren, Shmuel S, 2001. "Priority Network Access Pricing for Electric Power," Journal of Regulatory Economics, Springer, vol. 19(3), pages 239-70, July.
- Wilson, Robert B, 1989. "Efficient and Competitive Rationing," Econometrica, Econometric Society, vol. 57(1), pages 1-40, January.
- Chi-Keung Woo & Nate Toyama, 1986. "Service Reliability and the Optimal Interruptible Rate Option in Residential Electricity Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 123-136.
- Joskow, P.L., 2005.
"Patterns of Transmission Investment,"
Cambridge Working Papers in Economics
0527, Faculty of Economics, University of Cambridge.
- Chao, Hung-po & Wilson, Robert, 1987. "Priority Service: Pricing, Investment, and Market Organization," American Economic Review, American Economic Association, vol. 77(5), pages 899-916, December.
- Spulber, Daniel F, 1992. "Capacity-Contingent Nonlinear Pricing by Regulated Firms," Journal of Regulatory Economics, Springer, vol. 4(4), pages 299-319, December.
- Rudnick, Hugh & Raineri, Ricardo, 1997. "Transmission pricing practices in South America," Utilities Policy, Elsevier, vol. 6(3), pages 211-218, September.
- Spulber, Daniel F, 1993. "Monopoly Pricing of Capacity Usage under Asymmetric Information," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 241-57, September.
- Smith, Stephen A, 1989. "Efficient Menu Structures for Pricing Interruptible Electric Power Service," Journal of Regulatory Economics, Springer, vol. 1(3), pages 203-23, September.
- Wilson, Robert, 1989. "Ramsey Pricing of Priority Service," Journal of Regulatory Economics, Springer, vol. 1(3), pages 189-202, September.
- Chao, Hung-Po & Peck, Stephen C, 1998. "Reliability Management in Competitive Electricity Markets," Journal of Regulatory Economics, Springer, vol. 14(2), pages 189-200, September.
- Besanko, David & Donnenfeld, Shabtai & White, Lawrence J, 1987. "Monopoly and Quality Distortion: Effects and Remedies," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 743-67, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.