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Regulatory Objectives and the Intensity of Unbundling in Electricity Markets

Henrik Lindemann

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Despite the positive effect electricity grids separated from generation and supply by ownership are expected to have on the level of competition in the non-network activities, several EU member states still adhere to a solely legally unbundled transmission grid. This choice might be induced by regulators focusing on objectives other than the promotion of consumer interests: theoretically analyzing the decisions an authority takes on both the unbundling regime and the grid charge when it supervises a network monopolist providing a downstream Cournot duopoly with capacity, we find an agency pursuing consumer-oriented goals to always implement Ownership Unbundling. For a regulator acting in the interests of the industry or the government, though, results suggest the authority to be indifferent between Legal and Ownership Unbundling; minor potential drawbacks of a network separated by ownership for the agency or the companies might then tip the scales and cause the regulator to adhere to Legal Unbundling.

Keywords: Legal Unbundling; Ownership Unbundling; Regulatory Authorities; Regulatory Objectives (search for similar items in EconPapers)
JEL-codes: D73 L12 L13 L42 L50 L51 L94 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-01
New Economics Papers: this item is included in nep-com, nep-ene, nep-ind and nep-reg
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Citations: View citations in EconPapers (1)

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