Arbeitspapier
The effect of monopoly regulation on the timing of investment
This paper contributes a theoretical analysis of the effects of different types of regulation on the timing of monopoly investment in a setting with lumpy investment outlays. Concentrating on the case where investment increases the regulatory asset base, we distinguish between price-based regulation and cost-based regulation. Under cost-based regulation, investment triggers a change of regulated prices, whereas, under price-based regulation, investment does not affect them. To motivate investment, we focus on wear and tear leading to replacement investment and on demand growth resulting in expansion investment. Our main conclusion is that cost-based regulation accelerates investment compared to price-based regulation.
- Language
-
Englisch
- Bibliographic citation
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Series: Bremen Energy Working Papers ; No. 09
- Classification
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Wirtschaft
Market Structure, Pricing, and Design: Monopoly
Financial Economics: General
Economics of Regulation
- Subject
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Cost-based regulation
Expansion investment
Investment timing
Monopoly
Price-based regulation
Replacement investment
- Event
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Geistige Schöpfung
- (who)
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Borrmann, Jörg
Brunekreeft, Gert
- Event
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Veröffentlichung
- (who)
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Jacobs University Bremen, Bremer Energie Institut
- (where)
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Bremen
- (when)
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2011
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Borrmann, Jörg
- Brunekreeft, Gert
- Jacobs University Bremen, Bremer Energie Institut
Time of origin
- 2011
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