IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v49y2016i3d10.1007_s11149-016-9300-z.html
   My bibliography  Save this article

Regulating networks in decline

Author

Listed:
  • Christopher Decker

    () (Research Fellow in Law and Economics, CSLS, University of Oxford)

Abstract

Abstract Demand for some services provided on traditional postal, electricity, gas and fixed telecommunications networks can be characterized as being in decline in some jurisdictions. Declining demand can give rise to difficult questions for regulators, in particular, the extent to which network operators can fully recover the costs of historic investments, and the efficiency and distributional effects of applying different rate structures. It can also raise fundamental questions about: the on-going rationale for regulation; the essential functions provided by network operators; and whether regulations should be applied symmetrically to traditional and alternative suppliers. Depending on the pace and scale of the decline, regulation may need to adapt. Proposals for adapting regulation are identified and critically examined in this paper, particularly in terms of the approach to setting the allowed level of revenues and the determination of rate structures.

Suggested Citation

  • Christopher Decker, 2016. "Regulating networks in decline," Journal of Regulatory Economics, Springer, vol. 49(3), pages 344-370, June.
  • Handle: RePEc:kap:regeco:v:49:y:2016:i:3:d:10.1007_s11149-016-9300-z
    DOI: 10.1007/s11149-016-9300-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11149-016-9300-z
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brennan, Timothy J & Boyd, James, 1997. "Stranded Costs, Takings, and the Law and Economics of Implicit Constracts," Journal of Regulatory Economics, Springer, vol. 11(1), pages 41-54, January.
    2. Tanga McDaniel & Neuhoff, K., 2002. "Use of Long-term Auctions for Network Investment," Cambridge Working Papers in Economics 0213, Faculty of Economics, University of Cambridge.
    3. Wolfgang Briglauer, 2015. "How EU sector-specific regulations and competition affect migration from old to new communications infrastructure: recent evidence from EU27 member states," Journal of Regulatory Economics, Springer, vol. 48(2), pages 194-217, October.
    4. Bourreau, Marc & Cambini, Carlo & Doğan, Pınar, 2012. "Access pricing, competition, and incentives to migrate from “old” to “new” technology," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 713-723.
    5. Rogerson William P, 2011. "On the Relationship Between Historic Cost, Forward Looking Cost and Long Run Marginal Cost," Review of Network Economics, De Gruyter, vol. 10(2), pages 1-31, June.
    6. Timothy J. Brennan, 2013. "Energy Efficiency Policy Puzzles," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    7. Brown,Stephen J. & Sibley,David Sumner, 1986. "The Theory of Public Utility Pricing," Cambridge Books, Cambridge University Press, number 9780521314008.
    8. Stern, J. & Turvey, R., 2003. "Auctions of capacity in network industries," Utilities Policy, Elsevier, vol. 11(1), pages 1-8, March.
    9. Timothy J. Brennan & Michael A. Crew, 2014. "Gross substitutes versus marginal substitutes: implications for market definition in the postal sector," Chapters,in: The Role of the Postal and Delivery Sector in a Digital Age, chapter 1, pages 1-15 Edward Elgar Publishing.
    10. Severin Borenstein & James Bushnell, 2015. "The US Electricity Industry After 20 Years of Restructuring," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 437-463, August.
    11. Inderst, Roman & Peitz, Martin, 2014. "Investment under uncertainty and regulation of new access networks," Information Economics and Policy, Elsevier, vol. 26(C), pages 28-41.
    12. Timothy Brennan, 2010. "Decoupling in electric utilities," Journal of Regulatory Economics, Springer, vol. 38(1), pages 49-69, August.
    13. McDaniel, T., 2003. "Auctioning access to networks: evidence and expectations," Utilities Policy, Elsevier, vol. 11(1), pages 33-38, March.
    14. Jahn, Eric & Prüfer, Jens, 2008. "Interconnection and competition among asymmetric networks in the Internet backbone market," Information Economics and Policy, Elsevier, vol. 20(3), pages 243-256, September.
    15. Wolfgang Briglauer & Anton Schwarz & Christine Zulehner, 2011. "Is fixed-mobile substitution strong enough to de-regulate fixed voice telephony? Evidence from the Austrian markets," Journal of Regulatory Economics, Springer, vol. 39(1), pages 50-67, February.
    16. Helm, D., 2003. "Auctions and Energy Networks1," Utilities Policy, Elsevier, vol. 11(1), pages 21-25, March.
    17. Robert D. Willig, 1978. "Pareto-Superior Nonlinear Outlay Schedules," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 56-69, Spring.
    18. Briglauer, Wolfgang & Vogelsang, Ingo, 2011. "The need for a new approach to regulating fixed networks," Telecommunications Policy, Elsevier, vol. 35(2), pages 102-114, March.
    19. Newbery, David M., 2003. "Network capacity auctions: promise and problems," Utilities Policy, Elsevier, vol. 11(1), pages 27-32, March.
    20. Vogelsang, Ingo, 2001. "Price Regulation for Independent Transmission Companies," Journal of Regulatory Economics, Springer, vol. 20(2), pages 141-165, September.
    21. David Sappington & Dennis Weisman, 2010. "Price cap regulation: what have we learned from 25 years of experience in the telecommunications industry?," Journal of Regulatory Economics, Springer, vol. 38(3), pages 227-257, December.
    22. Yarrow, G., 2003. "Capacity auctions in the UK energy sector," Utilities Policy, Elsevier, vol. 11(1), pages 9-20, March.
    23. William B. Tye, 1983. "The postal service: Economics made simplistic," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 3(1), pages 62-73.
    24. Michael A. Crew & Paul R. Kleindorfer, 2012. "Non-linear Pricing, Volume Discounts and the USO under Entry," Chapters,in: Multi-Modal Competition and the Future of Mail, chapter 1 Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:rensus:v:82:y:2018:i:p3:p:3623-3632 is not listed on IDEAS

    More about this item

    Keywords

    Public utility; Networks; Declining demand; Excess capacity; Economic regulation; Rate structures; Sunk cost recovery;

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:49:y:2016:i:3:d:10.1007_s11149-016-9300-z. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.