The Effects of Average Revenue Regulation on Electricity Transmission Investment and Pricing
Industrial Organization from EconWPA
This paper investigates the long-run effects of average revenue regulation on an electricity transmission monopolist who applies a two- part tariff comprising a variable congestion price and a non-negative fixed access fee. A binding constraint on the monopolist fs expected average revenue lowers the access fee, promotes transmission investment, and improves consumer surplus. In a case of any linear or log-linear electricity demand function with a positive probability that no congestion occurs, average revenue regulation is allocatively more efficient than a Coasian two-part tariff if a positive access fee under average revenue regulation is lower than that under a Coasian two-part tariff.
Keywords: congestion pricing; electric power transmission; two-part tariff; average revenue regulation; Coasian two-part tariff (search for similar items in EconPapers)
JEL-codes: L (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene, nep-ind, nep-mic and nep-reg
Note: Type of Document - pdf; pages: 55
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Journal Article: The effects of average revenue regulation on electricity transmission investment and pricing (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:0512009
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