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Optimal Price Regulation for Natural and Legal Monopolies

Author

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  • Ingo Vogelsang

    (Boston University. Boston, MA. USA.)

Abstract

Optimal price regulation for natural and legal monopolies is an impossible task. The still difficult .task of good price regulation can be systematized by considering separately price level and price structure of the regulated firm. Various methods of price level and price structure regulation are evaluated and then considered for the regulation of electricity transmission, both in the context of an independent transmission company and of vertical integration between transmission and most of the generation capacity. The regulatory approach suggested uses price caps defined on two-part tariffs. This way, flexibility for short-term capacity utilization can be combined with incentives for investments in new transmission capacity.

Suggested Citation

  • Ingo Vogelsang, 1999. "Optimal Price Regulation for Natural and Legal Monopolies," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 5-43, January-J.
    • Handle: RePEc:emc:ecomex:v:8:y:1999:i:1:p:5-43
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    References listed on IDEAS

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    Cited by:

    1. Juan Rosellón, 2009. "Mechanisms for the Optimal Expansion of Electricity Transmission Networks," Chapters, in: Joanne Evans & Lester C. Hunt (ed.), International Handbook on the Economics of Energy, chapter 24, Edward Elgar Publishing.
    2. Richard M. Benjamin, 2016. "Improving U.S. Transmission Expansion Policy Through Order No. 1000," Contemporary Economic Policy, Western Economic Association International, vol. 34(4), pages 614-629, October.

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