“Vertical market power” is a contradiction in terms because “market power” is essentially horizontal—that is, it depends on relationships of firms within markets. FERC invokes the term to assess “convergence” mergers between electricity generators and natural gas suppliers. It...

Widespread concern over transmission capacity requires theoretical support to infer inadequacy from observed trends indicating reductions in the ratio of transmission to generation capacity over time. If integrated utilities had been regulated with allowed returns exceeding capital costs,...

We consider a firm A initially owning a software platform (e.g. operating system) and an application for this platform. The specific knowledge of another firm B is needed to make the platform successful by creating a further application. When B's application is completed, A has incentives to...

In the late 1990s, several proposals for a structural reform that would bring competition and market prices to the Russian gas industry were intensely debated. Splitting up Russian gas monopolist Gazprom into several producing companies was a considered option. In this paper, I examine...

Regulatory authorities in the European electricity sector use benchmarking techniques to determine the cost-efficient production level for an incentive regulation of distribution system operators (DSOs). With nearly 900 DSOs operating in the German electricity sector, of which 200 subject to...

The distribution grid for delivering electricity to the user has been paid for as part of the charge per kilowatt-hour that covers the cost of the energy itself. Conservation advocates have promoted the adoption of policies that “decouple” electric distribution company revenues or profits...

This paper looks at the status and prospects of renewables—with particular emphasis on windpower—in the electric power sector. Although renewables account for a steadily rising share of electricity generation in various countries, their role remains small in absolute terms. In part, this is...

The Regional Greenhouse Gas Initiative is an effort by nine states to constrain carbon dioxide emissions from the electric power sector using a cap-and-trade program. This paper assesses the importance of long-term electricity contracts under the program. We find that 12.2% of generation will be...

Planning of the electricity transmission system generally focuses on the pros and cons of providing generation close to the source of the power demand versus remote generation linked via the transmission system. Recent electricity supply problems in the western United States have renewed...

Policies to cap emissions of carbon dioxide (CO2), such as the recently announced agreement among seven northeastern states, are expected to have important effects on the electricity industry and on the market value of firms that own electricity generation assets. The economics literature finds...