Ownership Unbundling and Monopoly Privileges in Electricity Transmission

Alexander Filatov, Mikhail Vasilyev and Roman Zaika

International Journal of Public Administration, 2019, vol. 42, issue 15-16, 1333-1348

Abstract: This paper discusses how mandatory ownership unbundling and government-granted monopoly privileges in electricity transmission affect electricity prices. Aprioristic mathematical modeling taking into account potential competition is used. The models considered show that consumers can benefit from the regulation of the transmission monopoly only if the monopoly is subsidized or its costs are much lower than the maximum possible revenue. It is shown that potential competition and the absence of monopoly privileges in electricity transmission can decrease prices even when entry barriers are high. It is shown that mandatory ownership unbundling can nearly eliminate the effect of potential competition in transmission.

Date: 2019
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DOI: 10.1080/01900692.2019.1672727

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