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"Competition for the field" and pricing regulation: the case of the natural gas distribution in Italy

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  • Francesco Gull?

Abstract

Recently, looking at the incoming tenders for the new territorial districts in Italy, the Italian energy authority approved the new regulatory regime for the natural gas distribution where the difference between the VIR (residual industrial value) and the RAB (regulatory assets based) is recognized only to the new entrant (disparity of treatment). This article demonstrates that this decision is sub-optimal for firms and consumers. Compared to the situation under parity of treatment (the difference VIR-RAB is recognized for both new entrant and incumbent), the authority?s choice implies distorted results (the less efficient firm would win the tender) and higher final prices for consumers.

Suggested Citation

  • Francesco Gull?, 2014. ""Competition for the field" and pricing regulation: the case of the natural gas distribution in Italy," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2014(2), pages 21-42.
    • Handle: RePEc:fan:efeefe:v:html10.3280/efe2014-002002
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    References listed on IDEAS

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    1. Francesco Gull?, 2009. "Economie di scala e dimensione ottimale nella distribuzione del gas: una meta-analisi," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(3), pages 5-32.
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      More about this item

      Keywords

      Competition; natural gas; regulation;
      All these keywords.

      JEL classification:

      • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
      • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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