The Comparative Law and Economics of Energy Markets

This chapter surveys research on the regulation of the energy sector that applies the methodology of Comparative Law and Economics or provides insights on how to improve it. It begins with a discussion of the notion of economic efficiency in the context of energy markets liberalization and restructuring. Then the chapter goes on with a critical discussion of the pitfalls surrounding the design of indicators of institutional quality and the selection of regulatory best practices. Examples include indicators proposed by World Bank researchers and the monitoring of physical and financial energy markets in the US and the EU. The next methodological issue is the description, explanation and planning of the process leading to legal transplants. Two examples are discussed: emissions trading systems and feed-in tariffs. The last section of the chapter deals with behavioural approaches to energy regulation and the possibility to connect the comparative dimension to such analyses. The overall conclusion is that in the energy sector comparative law and economic theory have not achieved a satisfactory level of integration. A large share of the benefits stemming from this interdisciplinary collaboration still lies before us