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Better safe than sorry? Reliability policy in network industries

Author

Listed:
  • Rob Aalbers

    () (CPB Netherlands Bureau for Economic Policy Analysis)

  • Victoria Shestalova

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Sander Onderstal

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

This report develops a roadmap for reliability policy in network industries. Based on economic theory, we analyse the relationship between reliability and various types of government policy: privatisation, liberalisation, regulation, unbundling, and 'commitment policy'. We let government policy depend on (1) the feasibility of competition between networks, (2) contractibility of reliability, and (3) the relation between profit maximisation and public interests. We test this roadmap on the basis of the empirical literature and case studies on electricity, natural gas, drinking water, wastewater, and railways.

Suggested Citation

  • Rob Aalbers & Victoria Shestalova & Sander Onderstal, 2004. "Better safe than sorry? Reliability policy in network industries," CPB Document 73, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:docmnt:73
    as

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    File URL: http://www.cpb.nl/sites/default/files/publicaties/download/better-safe-sorry-reliability-policy-network-industries.pdf
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    References listed on IDEAS

    as
    1. Affuso, Luisa & Newbery, David M G, 2000. "Investment, Reprocurement and Franchise Contract Length in the British Railway Industry," CEPR Discussion Papers 2619, C.E.P.R. Discussion Papers.
    2. Domberger, Simon & Hall, Christine & Li, Eric Ah Lik, 1995. "The Determinants of Price and Quality in Competitively Tendered Contracts," Economic Journal, Royal Economic Society, vol. 105(433), pages 1454-1470, November.
    3. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    4. William J. Baumol & Alvin K. Klevorick, 1970. "Input Choices and Rate-of Return Regulation: An Overview of the Discussion," Bell Journal of Economics, The RAND Corporation, vol. 1(2), pages 162-190, Autumn.
    5. repec:adr:anecst:y:1994:i:33:p:05 is not listed on IDEAS
    6. Buehler, Stefan & Schmutzler, Armin & Benz, Men-Andri, 2004. "Infrastructure quality in deregulated industries: is there an underinvestment problem?," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 253-267, February.
    7. Marcel Canoy & S. Onderstal, 2003. "Tight oligopolies: in search of proportionate remedies," CPB Document 29, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Jeroen de Joode & Douwe Kingma & Mark Lijesen, 2004. "Energy policies and risks on energy markets; a cost-benefit analysis," CPB Special Publication 51, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Anette Boom, 2003. "Investments in Electricity Generating Capacity under Different Market Structures and with Endogenously Fixed Demand," CIG Working Papers SP II 2003-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    10. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
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    Citations

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    Cited by:

    1. Machiel van Dijk & Bert Minne & Machiel Mulder & Henry van der Wiel & J. Poort, 2005. "Do market failures hamper the perspectives of broadband?," CPB Document 102, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Anna Ter-Martirosyan & John Kwoka, 2010. "Incentive regulation, service quality, and standards in U.S. electricity distribution," Journal of Regulatory Economics, Springer, vol. 38(3), pages 258-273, December.
    3. Machiel Mulder & Victoria Shestalova & Mark Lijesen, 2005. "Vertical separation of the energy-distribution industry; an assessment of several options for unbundling," CPB Document 84, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Scheele, Ulrich, 2007. "Privatisierung, Liberalisierung und Deregulierung in netzgebundenen Infrastruktursektoren," Forschungs- und Sitzungsberichte der ARL: Aufsätze,in: Wandel der Stromversorgung und räumliche Politik, pages 35-67 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.

    More about this item

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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