The Spanish Electricity Industry: Plus ca Change

Working paper públicado por el Instituto de Economía Industrial. serie nº 317,IDEI Working papersIn this paper we describe the Spanish electricity industry and its current regulatory regime. Special emphasis is given to the description and discussion of market design issues (including stranded cost recovery), the evolution of market structure, investment in generation capacity and network activities. We also provide a critical assessment of the 1997 regulatory reform, which did not succeed in introducing effective competition, but retained an opaque regulation which has been subject to continuous governmental interventionism. Furthermore, the implementation of the Kyoto agreement could show the lack of robustness of the regulatory regime

Are Intellectual Property Rights Detrimental to Innovation?

Intellectual property rights are legal constraints that limit entry in industries where incumbents are innovators. The set of legal constraints is the same for all industries, without considering that the externalities created by entry are not necessarily negative for the incumbent or that the incumbent's R&D expenditures can be detrimental to entrants. We show that one unique set of legal rules can foster innovation and increase total R&D expenditures in some industries and be detrimental in others. The model is illustrated by case studies from the information and communication technologies industry (software, hardware, music and videogame industries).innovation; spillover; leadership; R&D regulation

Regulatory tradeoffs in designing concession contracts for infrastructure networks

Network activities typically involve collecting a good or service (such as electric utilities, phone services, and rail transportation) from many producers or distributing them to many users. Producers and users are often widely scattered, geographically. Close financial integration of networks is justified on the basis of economies of scope and scale and the benefits from pooling and coordinating. In many countries, network operators are completely integrated publicly-owned firms (private firms being deemed insufficiently efficient or equitable). Challengers of this practice contend that the inefficiency resulting from lack of competition outweighs the gain from economic integration. With reform, some competitive mechanisms can be introduced even when monopoly seems the best option for delivering a service. But conflicts between policymakers'objectives -including efficiency, equity, speed, speed of reform, and signaling- influence the design of concession contracts for infrastructure network services (including communications and transportation services). Competition begins with the unbundling of various stages of delivery. Then competitive bidding is popular, with the public authority keeping property rights on productive assets but conceding their operation to a private firm. The winner gets the right to maximize profits, within limits (having to provide universal services, for example, and avoid price discrimination). In liberalizing the delivery of a service, policymakers must consider not only efficiency but also social and fiscal feasibility. The authors discuss how relevant information asymmetry is in contract design and the award and regulatory processes. They also discuss how to design pricing to accommodate the obligation to provide universal service. To illustrate, they describe Argentina's experiment in liberalization, which is increasingly viewed as a model for changing private sector and government involvement in infrastructure services. Beginning in 1989, Argentina began privatizing utilities and transport services, because the government had decided that it could no longer afford to subsidize those services or finance the investments needed for their effective operation. To introduce competition, the government unbundled services and introduced competitive bidding. It also created sector-specific regulatory agencies to protect consumers from private monopolies and to protect the private concessionaires from government micromanagement. Making concession-based reform and contracted-based regulation of private monopolists sustainable will require strengthening regulatory agencies, clarifying their terms of reference and accountability, and better separating the responsibilities of sector ministers and regulators.Health Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,Labor Policies,International Terrorism&Counterterrorism,Environmental Economics&Policies,Health Economics&Finance,Education for the Knowledge Economy,Knowledge Economy,Economic Theory&Research

Normes de fabrication et barrières à l’entrée

Les entreprises ne sont pas totalement libres du choix des caractéristiques techniques de leurs produits. Pour diverses raisons (santé publique, sécurité des consommateurs, compatibilité), elles doivent s’adapter à des normes, lesquelles peuvent faire l’objet de manipulations stratégiques soit par des entreprises dominant le marché, soit par les pouvoirs publics qui protègent leurs industries nationales.L’article a pour but de proposer une typologie simple des normes industrielles et de définir un cadre d’analyse des problèmes stratégiques qu’elles soulèvent.Mots-clés : norme, barrière à l’entrée, réseau.Firms are not completely free to choose technical specifications for their products. For various reasons (public health, customers' security, compatibility), they must conform to standards which can be manipulated strategically either by dominant firms or by governments to protect domestic firms.The aim of this paper is to propose a simple typology for industrial strandards and to define an analytical framework for strategic problems raised by such standards.Key works: standard, entry barrier, network

Electricity Production with Intermittent Sources

The paper analyzes the interaction between a reliable source of electricity production and intermittent sources such as wind or solar power. We first characterize the first-best dispatch and investment in the two types of energy. We put the accent on the availability of the intermittent source as a major parameter of optimal capacity investment. We then analyze decentralization through competitive market mechanisms. We show that decentralizing first best requires to price electricity contingently on wind or solar availability. By contrast, traditional meters impose a second-best uniform pricing, which distorts the optimal mix of energy sources. Decentralizing the either cross-subsidy from the intermittent source to the reliable source of energy or structural integration of the two types of technology.