Network Regulation under electoral competition

Anke Leroux and Magnus Söderberg

Energy Economics, 2023, vol. 120, issue C

Abstract: Academics and policymakers generally agree that energy infrastructure should be subject to price regulation. More and more critics of modern regulatory approaches, however, point to the apparent failures of these mechanisms to achieve competitive pricing in practice. Some have suggested that customers ought to be involved in the regulatory process, but it is uncertain how customers' perspectives can best be incorporated. In this study, we evaluate how electoral competition influences monopoly pricing by extending well-known regulatory laboratory experiments. We show that electoral competition has a significant and negative impact on prices. This effect disappears when electoral competition is implemented jointly with incentive regulation, implying substitutability rather than complementarity of regulation and electoral competition.

Keywords: Regulation; Monopoly; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D47 L51 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:120:y:2023:i:c:s0140988323001123

DOI: 10.1016/j.eneco.2023.106614

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