nep-reg New Economics Papers
on Regulation
Issue of 2013‒11‒29
five papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The Law NOME: Some Implications for the French Electricity Markets By Pouyet, Jérôme; Sanin, Maria Eugenia; Creti, Anna
  2. In the shadow of the interlocking directorates regulation. A comparative case study By Alberto Baccini; Leonardo Marroni
  3. Risk aversion and technology mix in an electricity market By Guy Meunier
  4. Efficiency of Uniform Pricing in Universal Service Obligation By Jean-Christophe Poudou; Michel Roland
  5. Switching Costs and Network Effects – How Much Do they Really Matter in Mobile Telecommunications? By Mikołaj Czajkowski; Maciej Sobolewski

  1. By: Pouyet, Jérôme; Sanin, Maria Eugenia; Creti, Anna
    Abstract: The French law `Nouvelle Organisation du March e de l'Electricit e' makes available, at a regulated price, withdrawal rights to source low-cost electricity production from nuclear plants owned by the incumbent. Downstream market retailers bene t from such a measure, up to a given amount xed by the law, to compete on a level playing eld with the historical supplier. Our analysis assesses whether this production release pro- gramme is likely to result in a lower retail price. We show that whether pro-competitive e ects arise depends not only on the amount of the preassigned capacity but also on the rules used to allocate it to retailers.
    Keywords: Nome law; Retail competition; Electricity markets; France;
    JEL: L50 D43 L94
    Date: 2013–04
  2. By: Alberto Baccini; Leonardo Marroni
    Abstract: - Network analysis techniques are used for investigating the probable effects of a change in the regulation that aims to prevent the anticompetitive effects of the crossed presence of the same administrators in the boards of directors of competing firms, known as interlocking directorates (ID). The case study considered is a recent Italian law (Section 36 of Law Decree n. 201/2011) which prohibits ID on the boards of credit, insurance and financial companies. The ID networks of the top-100 Italian listed companies and of the financial companies in this same list are considered and compared with the analogous networks in the U.S.. The U.S. networks represent a benchmark given that in the U.S. companies act in the shadow of the Section 8 of the Clayton Act that has banned ID since 1914. The effects on the ID networks of the new Italian law are simulated under two different interpretations of the law. If the law will be applied according to a narrow interpretation, Italian ID network will rest substantially unaltered. On the other hand if the law will be applied according to a broad interpretation, the ID network for financial firms will be completely modified with a network configuration very similar to the American benchmark.
    JEL: K2 L41 G2 G34
    Date: 2013–09
  3. By: Guy Meunier (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: This article analyzes the eff ect of risk and risk aversion on the long-term equilibrium technology mix in an electricity market. It develops a model where fi rms can invest in baseload plants with a fi xed variable cost and peak plants with a random variable cost, and demand for electricity varies over time but is perfectly predictable. At equilibrium the electricity price is partly determined by the random variable cost and the returns from the two kinds of plants are negatively correlated. When the variable cost of the peak technology is high the return of peak plants is low but the return to baseload plants is high. Risk-averse fi rms reduce the capacity of the riskiest technology and develop the capacity of the other, compared to risk-neutral fi rms. In the particular case where a risk-neutral fi rm invests heavily in baseload technology and only sparely in peak capacity, a risk-averse fi rm would invest less in baseload, increase peak capacity, and increase total installed capacity.
    Keywords: Electricity market; Technology mix; Risk aversion
    Date: 2013–11–20
  4. By: Jean-Christophe Poudou; Michel Roland
    Abstract: We provide an efficiency justi…cation for the imposition of the uniform pricing constraint in universal service obligations (USO), where USO are de…fined as a set of constraints imposed on fi…rms belonging to a network industry. Besides the uniform pricing (UP) constraint, which is an obligation to serve all consumers at an identical price, constraints considered are the coverage constraint (CC), an obligation imposed to one of the …firms to serve a given segment of the market, as well as the license constraint (LC), a minimum or a maximum coverage restriction imposed on entrants. We show that adding the UP constraint to both a CC and a LC brings an increase in welfare. Our contribution comes from the full recognition of the role of a LC in well-designed USO and we illustrate this role with the particular case of linear demand.
    Date: 2013–11
  5. By: Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Maciej Sobolewski (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Our study focuses on the identification and the measurement of switching costs and network effects in mobile telecommunications. Although these two phenomena create similar consumer lock-in mechanisms, there are no empirical studies that integrate them into one model of subscriber’s behavior. Our study fills this gap by applying stated preference valuation methods to a representative sample of individual mobile phone users in Poland. We find that number portability can be attributed to only approximately 50% of the total switching costs associated with changing either the provider or the service and the remaining part is associated with status quo inertia. Additionally, we show that because network effects play an important role in service valuation, they lead to strengthening the lock-in mechanisms even further. Our study provides the first empirical measurements of the relative importance of these simultaneous effects and provides the estimates of their monetary value.
    Keywords: Switching costs, network effects, mobile telecommunications, mobile number portability, brand valuation, stated preference, non-market valuation, discrete choice experiment, random parameters multinomial logit model
    JEL: L1 L86 O3
    Date: 2013

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