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Customers’ value-for-money for a regulated service across different owners

Author

Listed:
  • Biggar , Darryl

    (The Ratio Institute)

  • Söderberg, Magnus

    (The Ratio Institute)

Abstract

What are the best ownership and governance arrangements for a natural monopoly facility? There are three broad approaches: (a) private ownership, coupled with arms-length public utility regulation; (b) some form of government (central, state, or local) ownership; and (c) customer or community ownership. While there is a substantial literature comparing outcomes under private and public (i.e., government) ownership, there is relatively little literature comparing private and/or government ownership with customer ownership. One of the obstacles of performance comparison is that different businesses may choose a different price-quality trade-off, making direct comparison impossible. In this study we cut through this problem by comparing customer perceptions of value-for-money. The study is based on interviews of more than 600 randomly selected electricity distribution customers in Sweden, approximately 150 in each ownership category (municipal, customer, private, and state). These distributors are subject to an identical regulatory framework. The results show that those owned directly by customers are perceived to deliver significantly more value for money than those owned by the government or by private investors. These results lend weight to the view that a well-governed customer-owned utility may lead to better outcomes than other owners"

Suggested Citation

  • Biggar , Darryl & Söderberg, Magnus, 2024. "Customers’ value-for-money for a regulated service across different owners," Ratio Working Papers 372, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0372
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    References listed on IDEAS

    as
    1. Bonev, Petyo & Glachant, Matthieu & Söderberg, Magnus, 2022. "Implicit yardstick competition between heating monopolies in urban areas: Theory and evidence from Sweden," Energy Economics, Elsevier, vol. 109(C).
    2. Nicola Doni & Pier Angelo Mori, 2014. "Pricing and Price Regulation in a Costumer-Owned Monopoly," Euricse Working Papers 1470, Euricse (European Research Institute on Cooperative and Social Enterprises).
    3. Perotti, Enrico C. & van Oijen, Pieter, 2001. "Privatization, political risk and stock market development in emerging economies," Journal of International Money and Finance, Elsevier, vol. 20(1), pages 43-69, February.
    4. Meade, Richard & Söderberg, Magnus, 2020. "Is welfare higher when utilities are owned by customers instead of investors? Evidence from electricity distribution in New Zealand," Energy Economics, Elsevier, vol. 86(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Electricity distribution; Value for money; Ownership; Customer satisfaction; Sweden;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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