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

Darryl Biggar and Magnus Söderberg
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Darryl Biggar: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden, http://www.ratio.se

No 372, Ratio Working Papers from 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"

Keywords: Electricity distribution; Value for money; Ownership; Customer satisfaction; Sweden (search for similar items in EconPapers)
JEL-codes: L32 L94 Q48 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2024-01-18
New Economics Papers: this item is included in nep-eur and nep-reg
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