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Decentralized Investment and Quality Decisions In Common-Pool Networks

Author

Listed:
  • Manuel A. Abdala

    (LECG, LLC)

  • Pablo T. Spiller

    (University of California, Berkeley)

Abstract

Investment and quality decisions in common-pool networks are typically governed by rules set by a centralized agency (either a monopoly or a regulator). In network systems where competition has flourished, decentralized solutions work better than centralized ones. Rent seeking and politicization is avoided at lower costs. Problems of free riding and entry barriers may remain, but improved self-governance procedures and antitrust supervision can handle them. Two illustrations from the electricity sector are presented here: FREBA in Buenos Aires province, Argentina; and MACQS, in New Zealand. These examples show how decentralized mechanisms may develop throughout network utilities.

Suggested Citation

  • Manuel A. Abdala & Pablo T. Spiller, 2005. "Decentralized Investment and Quality Decisions In Common-Pool Networks," Public Economics 0508004, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0508004
    Note: Type of Document - doc; pages: 22
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    File URL: http://econwpa.repec.org/eps/pe/papers/0508/0508004.doc
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    Cited by:

    1. Littlechild, Stephen C. & Ponzano, Eduardo A., 2008. "Transmission expansion in Argentina 5: The regional electricity forum of Buenos Aires province," Energy Economics, Elsevier, vol. 30(4), pages 1491-1526, July.
    2. Littlechild, S.C. & Skerk, C.J., 2004. "Regulation of transmission expansion in Argentina Part I: State ownership, reform and the Fourth Line," Cambridge Working Papers in Economics 0464, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    electricity transmission; network; power pool; electricity market; investment;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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