The role of governmental commitment on regulated utilities

Martin C. De Meio Reggiani, Miguel Vazquez, Michelle Hallack and Nélida B. Brignole

Energy Economics, 2019, vol. 84, issue C

Abstract: Regulation is generally interpreted as a relational contract between governments and private companies. Besides, regulation plays either a positive or a negative role in infrastructure development. This article is intended to understand the hindrance to stable policies in the regulation of network infrastructures. An original model where governments have a conflictive relationship with regulated companies was developed. The governmental opportunistic behaviour, which undermines the regulatory independence, was introduced in an infinitely repeated game. By including this variation, the hold-up problem can be modelled since a time inconsistency may occur. The model was illustrated using past-decade events about the Argentinean transport network of natural gas, proposing a possible reason for the triggering of a sustained hold-up.

Keywords: Regulation; Hold-Up; Natural gas transport (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:84:y:2019:i:c:s014098831930307x

DOI: 10.1016/j.eneco.2019.104518

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