The choice of whether to regulate firms or to allow them to compete is key. If the demand is sufficiently inelastic, competition entails narrower allocative inefficiencies but, also, smaller expected profits and, thus, weaker incentives to invest in cost reduction. Hence, deregulation should be...

We study the interdependency between two markets, where the first involves offering production capacity, while on the second actual production is sold. The key issue is that the expected product market outcome determines the opportunity cost for bidding at the capacity market while the capacity...

The determinants of incentive regulation are a key issue in economics. More powerful rules relax allocative distortions at the cost of lower rent extraction. Thus, they should be found where the reformer is more concerned about incentivizing investments through higher expected profits, and where...

The choice of whether to regulate firms or to allow them to compete is key. If the demand is sufficiently inelastic, competition entails narrower allocative inefficiencies but, also, smaller expected profits and, thus, weaker incentives to invest in cost reduction. Hence, deregulation should be...

The determinants of incentive regulation are an important issue in economics. More powerful rules relax allocative distortions at the cost of lower rent extraction. Hence, they should be found where the reformer is more concerned with stimulating investments by granting higher expected profits,...

Under what conditions does cost-of-service regulation lead firms to distort costs? This paper analyzes changes in fuel procurement practices by coal- and natural gas-fired electricity generating plants in the United States following state-level legislation that ended cost-of-service regulation...

The determinants of incentive regulation are an important issue in economics. More powerful rules relax allocative distortions at the cost of lower rent extraction. Hence, they should be found where the reformer is more concerned with stimulating investments by granting higher expected profits,...

This paper examines the relative importance of horizontal market structure, auction design, and vertical arrangements in explaining electricity prices. We define vertical arrangements as either vertical integration or long term contracts whereby retail prices are determined prior to wholesale...

Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency is less well understood. Neoclassical models of profit-maximization subsume static cost-minimizing behavior regardless of market...

The choice of whether to regulate firms or to allow them to compete is key. If the demand is sufficiently inelastic, competition entails narrower allocative inefficiencies but, also, smaller expected profits and, thus, weaker incentives to invest in cost reduction. Hence, deregulation should be...