This article focuses on the deregulation which leads to the marked reductions in the price of telephone services and electricity. In Germany the national monopoly on the provision of telephone services was abolished in 1995, followed, in the spring of 1998, by the ending of the regional monopolies on the supply of electricity. Since these dates the two industries have been exposed to the laws of competition. New companies, or those previously active only in certain regions, are now able to compete for telephone and electricity customers throughout the country. The competition to which this has given rise has led to marked cuts in prices; in doing so it has improved Germany's international competitive position. The established companies in these sectors have been obliged to cut their costs drastically and to pay greater heed to the needs of their customers. In order for the efficiency gains achieved to be maintained, steps must be taken to ensure that competition is not threatened by concentration processes. As a rule, state-regulated monopolies deploy more capital and labor than is necessary. This incurs higher costs and often leads to over-capacity. It could therefore be reasonably expected that introducing competition into the telecommunications and electricity-supply sectors would enable substantial cost and price reductions to be achieved. In the short run the size of these effects depends on current supply and demand behavior and in the long run, on additional, structural factors.
Price indexes, Supply-side economics, Consumers, Monopolies, Prices, Electricity, and Competition
This article focuses on the power exchanges in the liberalized electricity market. In recent years the liberalization of electricity markets in many countries has led to the breakdown of traditional monopolies and added the option of flexible and short-run forms of trading to the usually long-run supply contracts between electricity supply companies and their customers. Since as early as the start of the 1990's, electricity has been traded on so-called pools and increasingly also on exchanges in a number of countries. If effective competition is to be created and the desired effects of liberalization in particular cheaper energy supply are actually to be achieved, a number of basic conditions must be fulfilled. These include, firstly, the ability of both existing and new suppliers to offer their products under non-discriminatory conditions. Secondly, on the demand side customers must be given the opportunity to purchase a desired product at a transparent price from a supplier of their choice. For this to occur, thirdly, the market as a whole must be sufficiently transparent with respect to prices and the quality of the goods on offer.
Samples (Commerce), Industrial policy, Monopolies, Deregulation, Public utilities, and Electricity
The liberalization of many former state governed natural monopolies in sectors such as electricity, railroad and telecommunications is done by partial deregulation. Typically, entry is invited into elements of the production chain, yet under strict price and quality controls. This note considers some potential welfare effects of an unconventional type of conditional deregulation, used in the electricity market in Flanders, Belgium, where the utility companies are held to deliver the households they supply a complimentary basic electricity package free of charge. It is shown that, while decreasing the number of new entrants into the liberalized market, such pro bono supply requirements can nevertheless increase net total production. A general condition for a welfare maximizing level of “forced freebies” is derived. [ABSTRACT FROM AUTHOR]
Delegated legislation, Electric utilities, Monopolies, Monopolistic competition, Electricity, and Electric utility laws
A decade of experience has shown that monitoring the performance of public and private monopolies is the hardest part of electricity sector reform in South America—because operators control most of the information needed for effective regulation. South American electricity regulators can reduce this information asymmetry by increasing international coordination and relying on comparative measures of efficiency. To make it possible for them to do so, countries should harmonize their regulatory databases and develop methodologies for making comparisons. This paper uses data envelopment analysis and stochastic frontier analysis to estimate the efficiency of South America's main electricity distribution companies. Both approaches allow regulators to use relatively simple tests to check the robustness of their findings, strengthening their positions at regulatory hearings. [ABSTRACT FROM AUTHOR]
One of the main elements of the recent reform of electricity trading in the United Kingdom is the change from a uniform price auction in the wholesale market to discriminatory pricing. We analyze this change under two polar market structures (perfectly competitive and monopolistic supply), with demand uncertainty. We find that under perfect competition there is a trade-off between efficiency and consumer surplus between the two auction rules. We also establish that a move from uniform to discriminatory pricing under monopoly conditions has a negative impact on profits and output (weakly), a positive impact on consumer surplus, and ambiguous implications for welfare and average prices. [ABSTRACT FROM AUTHOR]