nep-com New Economics Papers
on Industrial Competition
Issue of 2005‒01‒09
four papers chosen by
Russell Pittman
US Department of Justice

  1. Regulation, Competition and Investment in the German Electricity Market: RegTP or REGTP By Gert Brunekreeft; Sven Twelemann
  2. The Spanish Electricity Industry: Plus ça change … By Claude Crampes; Natalia Fabra
  3. Determinants of Entry in the Indian Manufacturing Sector By Basant Rakesh; Saha Subhendra Nath
  4. Do Government Policies that Promote Competition Encourage or Discourage New Product and Process Development in Low and Middle-Income Countries? By George Clarke

  1. By: Gert Brunekreeft; Sven Twelemann
    Abstract: The German energy industries will be subjected to regulation of network access enforced by a sector-specific regulator. Whereas the gas industry broke the regime of negotiated third party access, in electricity nTPA ‘worked’, although it clearly resulted in a margin squeeze. The government currently discusses whether to use rate-of-return or incentive regulation, to allow ex-ante approval of charges, and the length of the regulatory lag. Close examination suggests that generation capacity still is adequate, but in the longer term there is reason to be alert. The regulatory changes and emission trading system can both contribute to retain supply security by increasing investment.
    Keywords: regulation, competition, emission trading, gas, electricity
    JEL: L42 L43 L94
    Date: 2005–01
  2. By: Claude Crampes; Natalia Fabra
    Abstract: In this paper we describe the Spanish electricity industry and its current regulatory regime. Special emphasis is given to the description and discussion of market design issues (including stranded cost recovery), the evolution of market structure, investment in generation capacity and network activities. We also provide a critical assessment of the 1997 regulatory reform, which did not succeed in introducing effective competition, but retained an opaque regulation which has been subject to continuous governmental interventionism. Furthermore, the implementation of the Kyoto agreement could show the lack of robustness of the regulatory regime.
    Date: 2005–01
  3. By: Basant Rakesh; Saha Subhendra Nath
    Abstract: Since 1991, the Indian economy has experienced major structural and policy changes. These changes were expected to reduce barriers to entry and increase competition. While anecdotal evidence seems to support the contention that contestability of various product markets in India has increased in recent years, due to easier entry conditions, no study has attempted a detailed empirical analysis of the same. In exploring the determinants of entry, two specific contributions are made: one, heterogeneity of potential entrants is recognized; two, appropriate econometric techniques are used for estimating the relationships. In the context of the emerging needs to study determinants of entry in the current Indian context and the research gaps, the study (1) identifies key factors that determine entry into the Indian manufacturing sector; (2) explores the difference in the factors that determine entry of different types of entrants and different modes of entry; and shows that it is analytically useful to distinguish between the impact of various causal factors on the incidence vis-à-vis extent of entry into a sector. While achieving the above objectives, the paper provides insights that will be useful for policy makers and managers designing strategies for incumbents and potential entrants.
    Date: 2005–01–05
  4. By: George Clarke (World Bank)
    Abstract: Previous work has shown that firms in low and middle-income countries in Eastern Europe and Central Asia that feel greater pressure to innovate from their competitors are more likely to introduce new products and services than firms that do not feel pressure (Carlin and others 2001; World Bank 2004). However, competition also appears to affect innovation in other ways. In particular, firms in these countries that face greater price competition appear to be less likely to innovate than other firms (Carlin and others 2001). Clarke assesses how competition and trade policy affect these different aspects of competition and, consequently, assesses their net impact on innovation. He finds that reducing tariffs and enacting and enforcing competition laws modestly increases both the pressure that firms feel regarding innovation and the level of price competition in the domestic economy. The net impact that lower tariffs have on new product and process development appears to be negative but small—for the most part the opposing effects cancel out. In contrast, stricter competition laws and better enforcement of those laws appear to increase the likelihood of new product and process development, especially when competition is treated as endogenous to innovation. This paper—a product of the Growth and Investment Team, Development Research Group—is part of a larger effort in the group to understand the determinants of competition.
    Keywords: Industry; International Economics; Private Sector Development
    Date: 2005–01–03

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