Testing the regulatory threat hypothesis: Evidence from Sweden

Bonev, Petyo; Glachant, Matthieu; Söderberg, Magnus

doi:10.1016/j.reseneeco.2020.101182

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Roles Regulations and Responsibilities In The Swedish Electr...1

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Cited by 6 publications

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“…As with electricity grids, it is inefficient to have several parallel DH grids, thus DH is also considered a natural monopoly (Bonev et al, 2020). Unlike the electricity market, DH can however only be traded locally.…”

Section: Roles Regulations and Responsibilities In The Swedish Electr...mentioning

confidence: 99%

District Heating as a Flexibility Service: Challenges in Sector Coupling for Increased Solar and Wind Power Production in Sweden

Fernqvist

Broberg²,

Torén³

et al. 2021

SSRN Journal

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Section: Roles Regulations and Responsibilities In The Swedish Electr...mentioning

confidence: 99%

District Heating as a Flexibility Service: Challenges in Sector Coupling for Increased Solar and Wind Power Production in Sweden

Fernqvist

Broberg²,

Torén³

et al. 2021

SSRN Journal

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Incentives of a monopolist for innovation under regulatory threat

Sağlam

2022

Econ Gov

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In this paper, we investigate whether a natural monopoly with private cost information can reduce the likelihood of regulatory threat by investing, in the ex-ante stage, in cost-reducing R&D to generate process innovations and whether such an investment can yield Pareto gains in welfare. We model the regulatory process using a sequential game where a benevolent regulator makes the first move by announcing the probability that the monopolist will be optimally regulated. The monopolist, hearing this announcement, chooses the optimal level of its R&D investment. We numerically compute the subgame-perfect Nash equilibrium of this game for a wide range of model parameters. Our results show that the monopolist invests more in R&D if the regulatory threat is less certain. Anticipating this response, the regulator makes her threat less certain if she puts more weight on the monopolist's welfare. Moreover, we find that regulation with uncertainty can be Pareto superior to regulation with certainty if the welfare weight of the monopolist is sufficiently, but not extremely, high or if the cost of R&D is sufficiently small.

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A theoretical and empirical analysis of district heating cost in Denmark

Boscán

Söderberg

2021

Energy Economics

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Testing the regulatory threat hypothesis: Evidence from Sweden

Cited by 6 publications

References 23 publications

District Heating as a Flexibility Service: Challenges in Sector Coupling for Increased Solar and Wind Power Production in Sweden

District Heating as a Flexibility Service: Challenges in Sector Coupling for Increased Solar and Wind Power Production in Sweden

Incentives of a monopolist for innovation under regulatory threat

A theoretical and empirical analysis of district heating cost in Denmark

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