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Incentive Regulation and Network Innovations

  • Dierk Bauknecht
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    Smart Grids require innovations in the electricity networks, mainly on the level of the distributed system operator (DSO). A main objective is to increase the share of distributed generation (DG) connected to that network level, but also to enable load management on the demand side. This paper analyses network innovations in the context of the regulatory framework, namely incentive regulation. It is structured as follows: The first section examines how cost-based and price-based regulatory schemes influence RD&D by regulated companies. This is followed by a discussion of various regulatory instruments to stimulate innovation. The third section provides a more general discussion of the pros and cons of promoting network innovations via network regulation.

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    File URL: http://cadmus.eui.eu/bitstream/handle/1814/15481/RSCAS_2011_02.pdf?sequence=1
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    Paper provided by European University Institute in its series RSCAS Working Papers with number 2011/02.

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    Date of creation: 22 Feb 2011
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    Handle: RePEc:rsc:rsceui:2011/02
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    Web page: http://www.eui.eu/RSCAS/

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    1. Bailey, Elizabeth E., 1974. "Innovation and regulation," Journal of Public Economics, Elsevier, vol. 3(3), pages 285-295, August.
    2. Gerhard CLEMENZ, 1999. "Optimal Price Cap Regulation," Vienna Economics Papers vie8904, University of Vienna, Department of Economics.
    3. Ai, Chunrong & Sappington, David E M, 2002. "The Impact of State Incentive Regulation on the U.S. Telecommunications Industry," Journal of Regulatory Economics, Springer, vol. 22(2), pages 133-59, September.
    4. Joshua S. Gans & Stephen P. King, 2004. "Access Holidays and the Timing of Infrastructure Investment," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 89-100, 03.
    5. Littlechild, S., 2006. "Beyond Regulation," Cambridge Working Papers in Economics 0616, Faculty of Economics, University of Cambridge.
      • Stephen Littlechild, 2007. "Beyond regulation," Chapters, in: Utility Regulation in Competitive Markets, chapter 1 Edward Elgar.
    6. Joskow, P.L., 1989. "Regulatory Failure, Regulatory Reform And Structural Change In The Electric Power Industry," Working papers 516, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. 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.
    8. Bourreau, Marc & Dogan, Pinar, 2001. "Regulation and innovation in the telecommunications industry," Telecommunications Policy, Elsevier, vol. 25(3), pages 167-184, April.
    9. Wesley A. Magat, 1976. "Regulation and the Rate and Direction of Induced Technical Change," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 478-496, Autumn.
    10. Kahn, Alfred E. & Tardiff, Timothy J. & Weisman, Dennis L., 1999. "The Telecommunications Act at three years: an economic evaluation of its implementation by the Federal Communications Commission," Information Economics and Policy, Elsevier, vol. 11(4), pages 319-365, December.
    11. Pollitt, M, 2007. "Liberalisation and Regulation in Electricity Systems: How can we get the balance right?," Cambridge Working Papers in Economics 0753, Faculty of Economics, University of Cambridge.
    12. Mayo, John W & Flynn, Joseph E, 1988. "The Effects of Regulation on Research and Development: Theory and Evidence," The Journal of Business, University of Chicago Press, vol. 61(3), pages 321-36, July.
    13. G. Brunekreeft & E. Ehlers, 2006. "Ownership Unbundling of Electricity Distribution Networks and Distributed Generation," Competition and Regulation in Network Industries, Intersentia, vol. 7(1), pages 63-87, March.
    14. Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Monash Economics Working Papers archive-39, Monash University, Department of Economics.
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