Utility price regulation and time inconsistency: comparisons with monetary policy

Telecommunications Policies: Measurement and Determinants

“…15). For a comparison of Central Bank independence and Regulator independence, including a discussion of the empirical literature in both fields, see Levine et al (2005) and Stern and Trillas (2003). 4 See Ros (2003), Wallsten (2001), Fink et al (2002), Boylaud and Nicoletti (2000), Li et al (2002), Gutiérrez (2003).…”

“…5 See LaPorta et al (1999 and2002), Kaufmann and Kraay (2002), Henisz and Zelner (2000a and b). 6 Levine et al (2005), Stern and Cubbin (2003) and Edwards and Waverman (2006) also stress the importance of developing indices to measure reform, and especially to measure regulatory independence. These papers provide a first assessment of our indices.…”

Regulation, Competition, and Liberalization

“…43 See Newbery (1999), Salant and Glenn A. Woroch (1992), and Paul Levine, Stern, and Francesc Trillas (2005) for formal analyses of this effect. Levine, Stern, and Trillas (2005) also emphasize the potential value of delegating authority to an independent regulator with substantial concern for the welfare of the firms he regulates.…”

“…Levine, Stern, and Trillas (2005) also emphasize the potential value of delegating authority to an independent regulator with substantial concern for the welfare of the firms he regulates.…”

Lobbies, delegation and the under-investment problem in regulation

“…This device is technically similar to the trigger-strategies and it works well (in the sense that an equilibrium can be shown to exist) in other settings such a monetary policy. However for price regulation, Levine et al (2005) find that such a reputational equilibrium with optimal investment may not exist if there exists a combination of a low depreciation rate of capital, a low growth of consumer demand and a degree of short-sightedness on the part of the regulator. The reason for this result is that once a large investment project has been completed, the punishment for revealing one's type as a 'weak' regulator by reducing the regulated price, namely the withdrawal of future investment, only impacts gradually over time as capital depreciates and depends on the need for more capacity to meet increasing demand.…”