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Deregulating with no regulator: Is the German electricity transmission regime institutionally correct?

  • Glachant, Jean-Michel
  • Dubois, Ute
  • Perez, Yannick

From 1998 to 2005, the German transmission grid has been put under a self-regulated arrangement. It seems hard to believe that transmission lines can be opened to "third-party access" only with a "negotiated access regime" and no regulator supervision. It seems contradictory with the notion of "ex post contractual hazards" promoted by V. Goldberg and O. Williamson. If a weak institutional arrangement is implemented, one might assume that it has to be harmful to network and market access. If it is not to be inefficient, why and how could it work? When looking at rules and prices for accessing the transmission network and the corresponding wholesale markets in Germany, the "club" arrangement for transmission opening does not appear so harmful. Accordingly, we have to reconsider the ex ante and ex post institutional mechanism of such a "club" arrangement. Ex ante, we first reconsider skills and strengths of industrial consumers and German Business associations in defining and assessing rules of transmission access. We underline that incomplete vertical and horizontal integration of German electricity companies impeded extensive cartel collusion. Ex post, we first look at a strong Competition Authority backing. Then we discover that ex ante and ex post dimensions are much more mixed and reinforced in an open "cumulative pro-competition process" framed by the Competition Authority.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 5 (May)
Pages: 1600-1610

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Handle: RePEc:eee:enepol:v:36:y:2008:i:5:p:1600-1610
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Wallsten, Scott J, 2001. "An Econometric Analysis of Telecom Competition, Privatization, and Regulation in Africa and Latin America," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 1-19, March.
  2. Spiller, Pablo T, 1996. "Institutions and Commitment," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 421-52.
  3. Levy, Brian & Spiller, Pablo T, 1994. "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(2), pages 201-46, October.
  4. Buchanan, James M, 1987. "The Constitution of Economic Policy," American Economic Review, American Economic Association, vol. 77(3), pages 243-50, June.
  5. Nyborg, Karine & Telle, Kjetil, 2003. "The Role of Warnings in Regulation: Keeping Control with Less Punishment," Memorandum 24/2003, Oslo University, Department of Economics.
  6. Jean-Michel Glachant, 2002. "L'approche néo-institutionnelle de la réforme des industries de réseaux," Revue économique, Presses de Sciences-Po, vol. 53(3), pages 425-435.
  7. J-M- Glachant, 2002. "Why regulate deregulated network industries?," Competition and Regulation in Network Industries, Intersentia, vol. 3(3), pages 297-312, September.
  8. Pablo T. Spiller & Ingo Vogelsang, 1997. "The Institutional Foundations of Regulatory Commitment in the UK: The Case of Telecommunications," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(4), pages 607-, December.
  9. Anne Perrot, 2002. "Les frontières entre régulation sectorielle et politique de la concurrence," Revue Française d'Économie, Programme National Persée, vol. 16(4), pages 81-112.
  10. Muller, Chr. & Wienken, W., 2004. "Measuring the degree of economic opening in the German electricity market," Utilities Policy, Elsevier, vol. 12(4), pages 283-290, December.
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