IDEAS home Printed from https://ideas.repec.org/a/emc/ecomex/v7y1998i2p267-308.html
   My bibliography  Save this article

Price and Rate Regulations for the Mexican Natural Gas Industry: Comments on Policy Decisions

Author

Listed:
  • Juan Rosellón

    (Professor, Department of Economics, CIDE. México, D.F. Mexico.)

Abstract

After the regulatory reform experienced in the Mexican gas sector, three areas with market power remained. Production is a legal monopoly of Pemex. Transportation and distribution are natural monopolies. Distributor’s gas sales to (mainly residential) customers are potentially monopolistic in case of lack of competition from marketers or substitute fuels. This paper presents the theoretical concepts and international lessons considered during the design of the price and rate regulations to limit these areas of market power. Benchmarking is used to control Pemex gas prices, while a sophisticated revenue cap methodology is employed to regulate transportation and distribution rates. All of these mechanisms provide incentives for productive efficiency, take care of allocative efficiency, and minimize the cost of regulation. The paper also points out lessons from the policy design process and some of the potential pitfalls of regulations as well.

Suggested Citation

  • Juan Rosellón, 1998. "Price and Rate Regulations for the Mexican Natural Gas Industry: Comments on Policy Decisions," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(2), pages 267-308, July-Dece.
    • Handle: RePEc:emc:ecomex:v:7:y:1998:i:2:p:267-308
    as

    Download full text from publisher

    File URL: http://www.economiamexicana.cide.edu/num_anteriores/VII-2/04_ROSELLON_267-308.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Law, Peter J, 1995. "Tighter Average Revenue Regulation Can Reduce Consumer Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 43(4), pages 399-404, December.
    2. David E. M. Sappington, 1991. "Incentives in Principal-Agent Relationships," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 45-66, Spring.
    3. Bradley, Ian & Price, Catherine, 1988. "The Economic Regulation of Private Industries by Price Constraints," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 99-106, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.
    2. Schmid, Andreas, 2007. "Incentive Compatibility and Efficiency in the contractual Insurer-Provider Relationship: Economic Theory and practical Implications: The Case of North Carolina," MPRA Paper 23311, University Library of Munich, Germany, revised 2008.
    3. Xiaoyan Qian & Chunling Zhu, 2007. "Risk Control of Pension Fund Management in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(6), pages 37-52, November.
    4. Ansgar Richter & Susanne Schrader, 2017. "Levels of Employee Share Ownership and the Performance of Listed Companies in Europe," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 396-420, June.
    5. Rod Tyers, 2015. "Service Oligopolies and Australia's Economy-Wide Performance," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 48(4), pages 333-356, December.
    6. Huennemeyer, Anne-Juliane & McKitrick, Ross & Rollins, Kimberly S., 1999. "Optimal Compensation For Endangered Species Protection Under Asymmetric Information," 1999 Annual meeting, August 8-11, Nashville, TN 21693, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Benoit Aubert & Michel Patry & Suzanne Rivard, 1995. "The Structure of Incentives in a Major Information Systems Outsourcing Contract: The Case of a North American Public Organization," CIRANO Working Papers 95s-14, CIRANO.
    8. Piotti, Geny, 2007. "Why do companies relocate? The German discourse on relocation," MPIfG Discussion Paper 07/14, Max Planck Institute for the Study of Societies.
    9. Sandro Casal & Antonio Filippin, 2024. "The effect of observing multiple private information outcomes on the inclination to cheat," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 543-562, April.
    10. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    11. Rodrigo Nobre Fernandez & André Carraro & Gabrielito Menezes & Giácomo Balbinotto Neto & Eduardo Tillmann, 2014. "Design Contract For Public-Privatepartnerships: A Theoretical Model For Brazilian Hospitals," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting] 062, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    12. Mehrdad Vahabi, 1999. "From Walrasian General Equilibrium to Incomplete Contracts: Making Sense of Institutions," Post-Print halshs-03704424, HAL.
    13. Witt, Ulrich & Schwesinger, Georg, 2013. "Phylogenetic footprints in organizational behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 90(S), pages 33-44.
    14. Erdogdu, Erkan, 2007. "Regulatory reform in Turkish energy industry: An analysis," Energy Policy, Elsevier, vol. 35(2), pages 984-993, February.
    15. Edward Stringham & Peter Boettke, 2006. "The failings of legal centralism for helping stock markets in transition," Politická ekonomie, Prague University of Economics and Business, vol. 2006(1), pages 22-34.
    16. Mause, Karsten, 2019. "Governing Public-Private Partnerships: The Problem of Low-Cost Decisions," EconStor Preprints 209582, ZBW - Leibniz Information Centre for Economics.
    17. Gianni De Fraja & Alberto Iozzi, 2008. "The Quest for Quality: A Quality Adjusted Dynamic Regulatory Mechanism," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(4), pages 1011-1040, December.
    18. Mark DeWeaver & James Roumasset, 2002. "Risk aversion as effort incentive: A correction and prima facie test of the moral hazard theory of share tenancy," Economics Bulletin, AccessEcon, vol. 15(4), pages 1-16.
    19. Jacob Paroush & Jonas Prager, 1999. "Criteria for contracting-out decisions when contractors can deceive," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(4), pages 376-383, December.
    20. Robert M. Gillenkirch & Heike Kreienbaum, 2017. "What guides subjective performance evaluation: Incentive alignment or norm enforcement?," Review of Managerial Science, Springer, vol. 11(4), pages 933-957, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:emc:ecomex:v:7:y:1998:i:2:p:267-308. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ricardo Tiscareño (email available below). General contact details of provider: https://edirc.repec.org/data/cideemx.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.