Universität zu Köln

Hoeffler, Felix and Wambach, Achim (2013). Investment coordination in network industries: the case of electricity grid and electricity generation. J. Regul. Econ., 44 (3). S. 287 - 308. DORDRECHT: SPRINGER. ISSN 1573-0468

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Abstract

Liberalization of network industries frequently separates the network from the other parts of the industry. This is important in particular for the electricity industry where private firms invest into generation facilities, while network investments usually are controlled by regulators. We discuss two regulatory regimes. First, the regulator can only decide on the network extension. Second, she can additionally use a capacity market with payments contingent on private generation investment. For the first case, we find that even absent asymmetric information, a lack of regulatory commitment can cause inefficiently high or inefficiently low investments. For the second case, we develop a standard handicap auction which implements the first best under asymmetric information if there are no shadow costs of public funds. With shadow costs, no simple mechanism can implement the second best outcome.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Hoeffler, Felix UNSPECIFIED UNSPECIFIED UNSPECIFIED Wambach, Achim UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-471698
DOI:	10.1007/s11149-013-9227-6
Journal or Publication Title:	J. Regul. Econ.
Volume:	44
Number:	3
Page Range:	S. 287 - 308
Date:	2013
Publisher:	SPRINGER
Place of Publication:	DORDRECHT
ISSN:	1573-0468
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language OWNERSHIP Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/47169