Electricity Merger Analysis: Market Screens, Market Definition, and Other Lemmings

Much discussion and effort have been devoted to the use of market power screens to detect market power that might arise from existing generation asset portfolios or utility acquisition of new generation assets. The quest is to find the “Holy Grail”: a market power detection mechanism that minimizes the costs to all parties involved while finding the majority of market power exercises. This article contends that market power screens should be utilized with caution in policy and litigation applications because while they meet the criteria of minimizing enforcement costs, they are often unable to detect many types of market power exercises that an electric utility might undertake. The article begins with a discussion of the polestar for all screens—the Department of Justice/Federal Trade Commission Horizontal Merger Guidelines—and its limitations. Next, the article examines the accidentally correct, absolutely incorrect, and other outcomes that arise from the application of screens using FERC’s merger policy statement, “contestable load” analysis, and other examples. The Article concludes by noting that many types of market power exercises are undetectable with market power screens, and that better approaches would increase the probability of detection, given the low level of penalty current imposed upon those that wield market power.     

Seven tools for creating adaptive policies

Experience demonstrates that policies crafted to operate within a certain range of conditions are often faced with unexpected challenges outside of that range. The result is that many policies have unintended impacts and do not accomplish their goals. Adaptive policies are designed to function more effectively in complex, dynamic, and uncertain conditions. Based on over a dozen case studies on public policies relating to agriculture and water resources management in Canada and India, we conclude that there are seven tools policymakers should follow to create adaptive policies. Adaptive policies anticipate and plan for the array of conditions that lie ahead: (#1) using integrated and forward-looking analysis; (#2) monitoring key performance indicators to trigger built-in policy adjustments; (#3) undertaking formal policy review and continuous learning; and (#4) using multi-stakeholder deliberation. But not all situations can be anticipated. Unknown unknowns and deep uncertainty will always be part of policymaking. Adaptive policies are able to navigate toward successful outcomes in settings that cannot be anticipated in advance. This can be done by working in concert with certain characteristics of complex adaptive systems and thereby facilitating autonomous actions among stakeholders on the ground. To a degree, adaptive policy tools #3 and #4 can be used toward this purpose, but most directly, such autonomous tools include: (#5) enabling self-organization and social networking; (#6) decentralizing decisionmaking to the lowest and most effective jurisdictional level; and (#7) promoting variation in policy responses. This paper elaborates on these seven tools as a pragmatic guide for policymakers who find themselves working in highly complex, dynamic, and uncertain settings.     

EXPERIMENTAL ASSET MARKETS WITHIN FINANCE

Abstract. This paper addresses the concept of market efficiency, presenting a critical review of the conventional tests in the area, which in turn provides the justification for employing an experimental methodology. The literature on experimental asset markets within finance is then reviewed and evaluated.     

‘How would you measure something like that?’: Quality in a Retail Bank

In this paper we explore a case study of total quality management (TQM) within the financial services sector. We demonstrate that a ‘conformance to requirements’ approach towards TQM is concerned with increasing management’s physical and financial control over procedures, documentation, systems and people. Such an approach only partially addresses quality because (a) there can never be a precise ‘conformance’ and (b) this approach neglects customers and employees. We illustrate that often management do not understand the flaws/problematics and underlying philosophy behind TQM. Thus they continue to adopt ‘inconsistent’ approaches, such as attempting to control costs and employees while espousing the importance of the customer and the need for a trust-based culture. Yet, whether or not they understand the rationale behind TQM and attempt to widen their focus by considering people and customers more directly, we argue that management cannot easily adopt a ‘consistent’ approach because a preoccupation with controlling costs is bound up with career-based identities and hierarchical power relations. Ultimately we argue that management cannot control ‘quality’ in any simple top down way, essentially because of the ‘indeterminacy’ of labour, the ‘intangibility’ of customer satisfaction, and the complexity of organizational power and identity relations.     

‘What Happens when the Phone goes Wild?’: Staff,Stress and Spaces for Escape in a BPR Telephone Banking Work Regime

This paper explores the experiences of staff working under a business process re-engineering (BPR) work regime. We examine the nature of work within a team-based, multi-skilled and empowered environment within financial services. Despite mixed responses our case study indicates that for those employees who remain in employment after ‘re-engineering’, working conditions may become more stressful and intensive. Although some staff may welcome those elements of a BPR work regime that facilitate a more varied work experience, the possibilities for satisfaction are often curtailed due to management$apos; preoccupation with productivity and ‘bottom line’ results. In practice BPR is neither as simple to implement nor as ‘rational’ in its content as the gurus would have us believe. Partly for these reasons it is also not as coercive in its control over labour as some critics fear. While managers may only want to encourage employee autonomy that is productive to its ends, we identify a number of occasions where autonomy is disruptive of corporate goals. The paper seeks to add to our understanding of ‘stress’, ‘resistance’ and management ‘control’ by considering the ways in which staff engage in the operation of BPR so as to maintain and reproduce these conditions. This dynamic cannot be understood, however, outside of the relations of power and inequality that characterize society and employment.     

The determinants of corporate sustainability performance

This paper investigates the factors that drive high levels of corporate sustainability performance (CSP), as proxied by membership of the Dow Jones Sustainability World Index. Using a stakeholder framework, we examine the incentives for US firms to invest in sustainability principles and develop a number of hypotheses that relate CSP to firm‐specific characteristics. Our results indicate that leading CSP firms are significantly larger, have higher levels of growth and a higher return on equity than conventional firms. Contrary to our predictions, leading CSP firms do not have greater free cash flows or lower leverage than other firms.