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Abstract:
Successful network utility privatisation requires incentive-based regulation that allows investment to be adequately rewarded from unsubsidised revenues while maintaining quality, and restructuring that permits effective competition for the network services. The potential for success and the size of the potential gains from privatising and restructuring vary by utility, with a ranking telecoms, gas, electricity, water and lastly, rail. There are doubts whether privatising rail delivers sustainable improvements. The paper gives evidence primarily from the UK, and surveys some of the international evidence. Real consumer prices for telecoms, gas and electricity fell in the UK, overcoming most opposition to privatisation.

privatization, regulation, competition, telecoms, electricity, gas, water, rail

Abstract:
The theory of road pricing developed for single links suggests time and location varying charges equal to the marginal congestion cost at the efficient level of traffic. The second-best network counterpart is derived, but would be infeasible to implement. Cordon tolls are feasible, and their optimal level computed for eight towns. A cost-benefit study showed that with a suitable choice of location, all schemes were socially profitable, though with wide variations across towns. The environmental benefits of cordon tolls are measured and shown to correlate with optimal congestion tolls, but to be modest in size and not to affect the optimal toll.

Road Traffic Congestion, Road Pricing, Congestion Charging, Cordon Tolls, Environmental Taxes

Abstract:
Driven by ideology, economic reasoning, and early success stories, vast amounts of financial resources and effort have been spent on reforming infrastructure industries in developing countries. It is, therefore, important to examine whether evidence supports the logic of reforms. This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions and sector governance play an important role in success and failure of reform. Also, reforms also appear to have increased operating efficiency and expanded access to urban customers. However, they have to a lesser degree passed on efficiency gains to customers, tackled distributional effects, and improved rural access. Moreover, some of the literature is not methodologically robust and on par with general development economics literature. Further, findings on some issues are limited and inconclusive while other important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence.

Electricity, reform, developing countries

Abstract:
This paper investigates the effects of contractual arrangements of firms operating in a regulated environment on their investment behaviour. It studies the interaction between repeated auctions of rail franchises of different lengths, uncertainty and incentives for investment in rolling stock, following the privatisation of British Rail. Theoretical predications are tested empirically using a unique panel of data. Theory suggests that short franchise reduce incentives to invest in specific assests. Our empirical results suggest that competition and strategic behaviour at the re-procurement stage can create incentives for delayed investment. Investing just before the end of the franchise enhances the uncumbent's probability of having the contract re-awarded and provides it with a first-mover advantage, while raising the entry costs for other potential bidders.

Railways, Investment, Contracts, Panel Data

Abstract:
Since the early 1990s, substantial resources and efforts have been spent on implementing market-oriented electricity reforms in developing countries. While there are important sectoral, economic, and social dimensions involved in electricity reform, empirical analysis and evaluation of reforms have been of limited use for testing the economic rationale of reforms and policy advice. This may partly be attributed to a lack of generally accepted and measured indicators for monitoring the progress, impacts, and performance of reforms. In this paper we propose a set of indicators as a first step toward filling this gap and developing a coherent framework for studying electricity reform in developing countries that covers resource and institutional endowments, key reform steps, market structure, performance, and various impacts.

Electricity, reform, developing countries

Abstract:
We ask under what conditions transmission contracts increase or mitigate market power. We show that the allocation process of transmission rights is crucial. In an efficiently arbitraged uniform price auction generators will only obtain contracts that mitigate their market power. However, if generators inherit transmission contracts or buy them in a 'pay-as-bid' auction, then these contracts can enhance market power. In the two-node network case banning generators from holding transmission contracts that do not correspond to delivery of their own energy mitigates market power. Meshed networks differ in important ways as constrained links no longer isolate prices in competitive markets from market manipulation. The paper suggests ways of minimizing market power considerations when designing transmission contracts.

Electricity, market power, transmission rights, nodal pricing

Abstract:
The paper assesses the distributional and efficiency/disincentive aspects of the Greek indirect tax system, which provides 60% of total tax revenue. The marginal welfare costs of broad commodity groups were computed to identify welfare-improving directions of reform. The disincentive effects were estimated from marginal indirect tax rates using Household Expenditure Survey data. The indirect tax structure is shown to be unnecessarily complicated and inefficient, without achieving any redistributive goals. The UK indirect tax structure was shown to be simpler, more equitable and more efficient to implement and administer when simulated on Greek consumers.

Indirect Tax Reform, Inequality, Tax Efficiency, Disincentive Effects, Tax Simulations

Abstract:
The paper discusses the measurement of road use costs and the design of a system of road user charges. The first theorem states that road damage externalities are zero, so that road damage costs are equal to the attributable fraction of maintenance expenditures. The second states that with constant returns and optimal capacity, congestion charges recover total overhead costs. Freight vehicles should pay their road use costs, but additional pure taxes on passenger transport should be guided by the principles of indirect taxation. Road use costs will typically fall short of road expenditures, but the additional pure taxation will more than cover the shortfall.

Abstract:
The EU faces challenges in reforming the Gas and Electricity Directives to implement the single market in electricity and gas. The Paper argues that there is unfinished business in the areas of regulation, restructuring, encouraging proper risk management through contracting, and designing markets and regulation to ensure effective and sustainable competition in the services supplied over the networks. Regulators often lack critical information and appropriate power to act. Restructuring is problematic, requiring forceful competition authorities with a clear agenda to achieve desirable structural reforms. A key issue is striking the right balance between complete liberalisation and ensuring adequate capacity and investment. Finally, proactive competition policies will be necessary to resist the powerful forces for vertical and horizontal integration visible in the Union.

Regulation, competition, risk, contracts, electricity, gas, EU

Abstract:
Economists wishing to analyse road congestion and road pricing have usually relied on link-based speed-flow relationships. These may provide a poor description of urban congestion, which mainly arises from delays at intersections. Using the simulation model SATURN, we investigate the second-best proportional traffic reduction and find that linear speed-flow relations describe network flows quite well in eight English towns, though the predicted congestion costs and charges overstate those apparently required in our second best model. We then confront the results with feasible optimal cordon charges, and find them reasonably correlated, but imperfect predictors.

Traffic congestion, road pricing, efficient charges, congestion tolls

Abstract:
The paper analyses the revenue-raising, distributional and incentive effects of the personal tax system in Hungary from the start of the transitional tax reforms of 1988 to 1998, and shows that the tax structure has converged to an almost linear form similar to the more heavily taxed EU countries. The 1998 pension reform has reversed a trend increase in average and marginal tax rates but marginal rates still appear too high for a country wishing to encourage growth and employment creation.

Tax reform, tax burden, efficiency, equity, redistribution, Hungary, transition

Abstract:
The supply function model of the English electricity spot market is extended to include a contract market and contestable entry, both of which have dramatic effects on the determination of equilibrium. I present an analytically tractable model that can be solved with contracts, variable numbers of competitors, and capacity constraints. In the case of constant marginal costs and linear demand, two outcomes are possible: if new plant is the same as existing plant and incumbents have insufficient capacity, entry will occur, but if new plant has lower variable costs, then incumbents can invest to deter entry.

Abstract:
The paper analyzes the revenue-raising, distributional and incentive effects of the personal tax system in Hungary from the start of the transitional tax reforms of 1988 and develops methods for estimating marginal indirect taxes. It evaluates the distributional impact of revenue-neutral equivalent indirect tax changes that have occurred since 1988 and shows them to have been regressive.