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The régulation of transborder network services

Per Agrell () and Jerome Pouyet

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Abstract: Integration and reinforcement of network infrastructure for transport, energy and water is a key component in the European policy framework for market competitiveness. However, in spite of considerable analysis and community co-funding since 1995, actual implementation progress for the 90 priority projects in the Transeuropean Energy Networks programme has been meager.The estimated network investment need of 40,000 M euro (2003-2013) is challenging the current heterogenous institutional mix of European network operators, regulators and the role of the commission. This paper presents an analytic framework for the network investment problem under decentralized control in both regulation, infrastructure ownership and management. Our results on the underinvestment problem from regulatory competition and non-coordination provide insights into the policy relevant topic of common infrastructure investment under varying budget balancing constraints and management objectives. From an economic policy viewpoint, the paper is tangential to the more general discussion on regulatory centralization vs. subsidiarity in the European Union.

Date: 2005
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