Open Ownership - Not Common Carriage

Dan Alger

No 19031, Working Paper Series from Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation

Abstract: We consider regulating natural monopolies with open ownership and competitive rules as a substitute for common carriage regulation and illustrate it with an application for natural gas pipelines. A single set of production assets exhausts any economies of scale or scope while owners compete with each other due to incentives from open ownership rules that promote efficient investment choices primarily by breaking down barriers to entry and competitive rules that promote an efficient secondary market. We argue that regulating a natural monopoly with these rules in a market structure we call a competitive joint venture significantly increases the efficiency of pricing output and capacity choices and may dramatically reduce regulatory costs when compared to regulating with common carriage.

Keywords: open ownership (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcsr:19031

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