Dual Regulation or Duelling Regulators? The Welfare Impacts of Overlapping Regulatory Regimes
Matthew Bennett
No 23, Royal Economic Society Annual Conference 2002 from Royal Economic Society
Abstract:
Previous literature has examined the impact of a single regulatory constraint on the final product. However, an industry such as electricity requires two network inputs from naturally monopolistic industries i.e. gas transmission and electricity transmission. This paper models the impact of such dual regulation schemes finding: Firstly, the result of previous literature that tightening regulation increases prices to higher cost consumers may be reversed. Secondly, dual input regulation creates distortions if regulators do not explicitly co-operate. Where regulators place some weight on their respective sectorís consumer surplus, these differing agendas lead to competition in regulatory strictness resulting in a significant sub optimal welfare outcome relative to a joint regulatory body.
Date: 2002-08-29
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2002:23
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