Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92965
Authors: 
Höffler, Felix
Wambach, Achim
Year of Publication: 
2013
Series/Report no.: 
EWI Working Paper 13/12
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 …rms 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.
Subjects: 
Regulation
commitment
capacity markets
transmission system investment
JEL: 
D44
D47
K23
L51
L94
Document Type: 
Working Paper

Files in This Item:
File
Size
255.08 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.