EconPapers    
Economics at your fingertips  
 

Should Merchant Transmission Investment be Subject to a Must-offer Provision?

Gert Brunekreeft and David M Newbery ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Merchant electricity transmission investment is a practically relevant example of an unregulated investment with monopoly properties. However, while leaving the investment decision to the market, the regulator may decide to prohibit capacity withholding with a must-offer provision. This paper examines the welfare effects of a must-offer provision prior to the capacity choice, given three reasons for capacity withholding: uncertainty, demand growth and pre-emptive investment. A must-offer provision will decrease welfare in the first two cases, and can enhance welfare only in the last case. In the presence of importer market power, a regulatory test might be needed.

Keywords: investment; must-offer; capacity withholding; regulation; electricity (search for similar items in EconPapers)
JEL-codes: L51 L94 L4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-ene
Date: 2005-08
Note: EPRG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.electricitypolicy.org.uk/pubs/wp/eprg0503.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.electricitypolicy.org.uk:80

Related works:
Journal Article: Should merchant transmission investment be subject to a must-offer provision? (2006) Downloads
Working Paper: Should Merchant Transmission Investment be subject to a Mustoffer Provision? (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0534

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().

 
Page updated 2019-08-20
Handle: RePEc:cam:camdae:0534