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Risk, price regulation, and irreversible investment

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  • Evans, Lewis T.
  • Guthrie, Graeme A.

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  • Evans, Lewis T. & Guthrie, Graeme A., 2005. "Risk, price regulation, and irreversible investment," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 109-128, February.
    • Handle: RePEc:eee:indorg:v:23:y:2005:i:1-2:p:109-128
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    References listed on IDEAS

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    1. Evans, Lewis & Guthrie, Graeme, 2003. "Asset Stranding is Inevitable: Implications for Optimal Regulatory Design," Working Paper Series 3881, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Valerie A. Ramey & Matthew D. Shapiro, 2001. "Displaced Capital: A Study of Aerospace Plant Closings," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 958-992, October.
    3. Hausman, Jerry & Myers, Stewart, 2002. "Regulating the United States Railroads: The Effects of Sunk Costs and Asymmetric Risk," Journal of Regulatory Economics, Springer, vol. 22(3), pages 287-310, November.
    4. Mandy David M. & Sharkey William W., 2003. "Dynamic Pricing and Investment from Static Proxy Models," Review of Network Economics, De Gruyter, vol. 2(4), pages 1-37, December.
    5. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, December.
    6. D. J. Johnstone, 2003. "Replacement Cost Asset Valuation and Regulation of Energy Infrastructure Tariffs," Abacus, Accounting Foundation, University of Sydney, vol. 39(1), pages 1-41, February.
    7. Cowan, Simon, 2004. "Optimal risk allocation for regulated monopolies and consumers," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 285-303, January.
    8. Jerry A. Hausman, 1997. "Valuing the Effect of Regulation on New Services in Telecommunications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 1-54.
    9. Marcus Asplund, 2000. "What Fraction of a Capital Investment is Sunk Costs?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 287-304, September.
    10. Marshall, William J & Yawitz, Jess B & Greenberg, Edward, 1981. "Optimal Regulation under Uncertainty," Journal of Finance, American Finance Association, vol. 36(4), pages 909-921, September.
    11. Nicholas Economides, 1999. "Real Options and the Costs of the Local Telecommunications Network," Working Papers 99-11, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    13. Littlechild Stephen, 2003. "Reflections on Incentive Regulation," Review of Network Economics, De Gruyter, vol. 2(4), pages 1-27, December.
    14. Frank L. Clarke, 1998. "Deprival Value and Optimized Deprival Value in Australasian Public Sector Accounting: Unwarranted Drift and Contestable Serviceability," Abacus, Accounting Foundation, University of Sydney, vol. 34(1), pages 8-17, March.
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    Cited by:

    1. Schober, Dominik & Schäffler, Stephan & Weber, Christoph, 2014. "Idiosyncratic risk and the cost of capital: The case of electricity networks," ZEW Discussion Papers 14-010, ZEW - Leibniz Centre for European Economic Research.
    2. Michele Moretto & Paolo M. Panteghini & Carlo Scarpa, 2008. "Profit sharing and investment by regulated utilities: A welfare analysis," Review of Financial Economics, John Wiley & Sons, vol. 17(4), pages 315-337, December.
    3. Peter Broer & Gijsbert Zwart, 2013. "Optimal regulation of lumpy investments," Journal of Regulatory Economics, Springer, vol. 44(2), pages 177-196, October.
    4. Ingo Vogelsang, 2012. "Incentive Regulation, Investments and Technological Change," Chapters, in: Gerald R. Faulhaber & Gary Madden & Jeffrey Petchey (ed.), Regulation and the Performance of Communication and Information Networks, chapter 4, Edward Elgar Publishing.
    5. Hahn, Robert & Evans, Lewis, 2010. "Regulating Dynamic Markets: Progress in Theory and Practice," Working Paper Series 4052, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. repec:vuw:vuwscr:19155 is not listed on IDEAS
    7. Ian Dobbs, 2011. "Modeling welfare loss asymmetries arising from uncertainty in the regulatory cost of finance," Journal of Regulatory Economics, Springer, vol. 39(1), pages 1-28, February.
    8. Borrmann, Jörg & Brunekreeft, Gert, 2020. "The timing of monopoly investment under cost-based and price-based regulation," Utilities Policy, Elsevier, vol. 66(C).
    9. Dominik Schober & Stephan Schaeffler & Christoph Weber, 2014. "Idiosyncratic risk and the cost of capital: the case of electricity networks," Journal of Regulatory Economics, Springer, vol. 46(2), pages 123-151, October.
    10. Neumann, Karl-Heinz & Vogelsang, Ingo, 2013. "How to price the unbundled local loop in the transition from copper to fiber access networks?," Telecommunications Policy, Elsevier, vol. 37(10), pages 893-909.
    11. Alain Fayard & David Meunier & Emile Quinet, 2012. "Motorway Provision and Management in France: Analyses and Policy Issues," Networks and Spatial Economics, Springer, vol. 12(2), pages 299-319, June.
    12. Evans, Lewis, 2005. "The Efficiency Test under Competition Law and Regulation in Small Distant Open Economy that is New Zealand," Working Paper Series 18958, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    13. Blum, Ulrich & Growitsch, Christian & Krap, Niels, 2006. "Network Investment and the Threat of Regulation – Preventing Monopoly Exploitation or Infrastructure Construction?," IWH Discussion Papers 7/2006, Halle Institute for Economic Research (IWH).
    14. Guthrie, Graeme, 2012. "Regulated prices and real options," Telecommunications Policy, Elsevier, vol. 36(8), pages 650-663.
    15. Lewis Evans, 2004. "The efficiency test under competition law and regulation in the small distant open economy that is New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 241-264.
    16. repec:vuw:vuwscr:18958 is not listed on IDEAS
    17. Nagy, Roel L.G. & Hagspiel, Verena & Kort, Peter M., 2021. "Green capacity investment under subsidy withdrawal risk," Energy Economics, Elsevier, vol. 98(C).
    18. Guthrie, Graeme, 2020. "Regulation, welfare, and the risk of asset stranding," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 273-287.
    19. Jamasb, Tooraj & Pollitt, Michael, 2008. "Liberalisation and R&D in network industries: The case of the electricity industry," Research Policy, Elsevier, vol. 37(6-7), pages 995-1008, July.
    20. Hahn, Robert & Evans, Lewis, 2010. "Regulating Dynamic Markets: Progress in Theory and Practice," Working Paper Series 19155, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    21. Andrea Gavosto & Guido Ponte & Carla Scaglioni, 2007. "Investment in Next Generation Networks and the Role of Regulation: A Real Option Approach," Working Papers Department of Economics 2007/31, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    22. Lewis Evans & Graeme Guthrie, 2006. "Incentive Regulation of Prices When Costs are Sunk," Journal of Regulatory Economics, Springer, vol. 29(3), pages 239-264, May.

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