Decoupling in electric utilities

Distributing electricity to users has been covered through the charge per kilowatt-hour for electricity used. Conservation advocates have promoted policies that “decouple” distribution revenues or profits from the amount of electricity delivered, claiming that usage-based pricing leads utilities to encourage use and discourage conservation. Because decoupling separates profits from conduct, it runs against the dominant finding in regulatory economics in the last 20 years—that incentive-based regulation outperforms rate-of-return profit guarantees. Even if distribution costs are independent of use, some usage charges can be efficient. Price-cap regulation may distort incentives to inform consumers about energy efficiency—getting more performance from less electricity. Utilities will subsidize efficiency investments, but only when prices are too low. If consumers fail to adopt energy efficiency measures that would be individually beneficial, decoupling can increase welfare, but only if all energy revenues are separated from use, not just those associated with distribution.     

Regulation and the market for corporate control: Hostile tender offers for electric and gas utilities

We document that regulation significantly constrains takeover activity. Of the twenty-one hostile offers for utilities between 1960 and 1990, only one was successful. In spite of this low rate of completion, announcement period returns to target utilities are positive and significant, although substantially smaller than average returns to nonregulated targets. We examine post-offer events and find that control-market effects are not entirely eliminated. One-third of hostile offers are followed by additional bids, control changes and/or divestitures. The regulatory and political environment changed during the period of this study and the frequency of hostile offers increased. Utility regulation, however, remains a substantial impediment to the completion of hostile takeovers.We have benefited from the insights and commentary of several individuals involved with the utility industry including: Douglas Hawes (LeBoeuf, Lamb, Leiby & MacRae); Lyle Koerper (Kansas Gas & Electric); John Rosenberg (Kansas Power & Light); Mark Sholander, Turner White, and Bernie Beaudoin (Kansas City Power & Light); Neil Talbot (Tellus Institute); Darin Klemm (The Wisconsin Investment Board); Melissa Whitten (Cascade Natural Gas Corp.); Gregory Enholm (Salomon Brothers); and David Medley (Donaldson, Lufkin, and Jenrette). We are also grateful for the comments of Edith Hotchkiss, Michael Jensen, David Mayers, Timothy Mech, Richard Ruback, Robert Taggart, Hassan Tehranian, and William Wilhelm, The paper has been substantially improved by the comments of the editor, Michael Crew, and two announomous referees.     

Welfare effects of unbundling under different regulatory regimes in natural gas markets

In this paper, we develop a theoretical model that enriches the literature on the pros and cons of ownership unbundling vis-à-vis lighter unbundling frameworks in the natural gas markets. For each regulatory framework, we compute equilibrium outcomes when an incumbent firm and a new entrant compete à la Cournot in the final gas market. We find that the entrant’s contracting conditions in the upstream market and the transmission tariff are key determinants of the market structure in the downstream gas market (both with ownership and with legal unbundling). We also study how the regulator must optimally set transmission tariffs in each of the two unbundling regimes. We conclude that welfare maximizing tariffs often require free access to the transmission network (in both regulatoy regimes). However, when the regulator aims at promoting the break-even of the regulated transmission system operator, the first-best tariff is unfeasible in both regimes. Hence, we study a more realistic set-up, in which the regulator’s action is constrained by the break-even of the regulated firm (the transmission system operator). In this set-up, we find that, for a given transmission tariff, final prices in the downstream market are always higher with ownership unbundling than with legal unbundling.     

Regulatory reform and productivity growth in the UK's public utilities

The reforms in the regulation of the UK'nationalised industries over the last decade are examined and the extent to which they have been successful in achieving one of their declared aims – that of increasing the efficiency of the enterprises' operations – is considered. To achieve this the productivity performance of nine of the largest enterprises over the last twenty years was analysed. The results show that the rate of productivity growth has been significantly higher during the 1980s, compared with the preceeding decade. It is concluded that a large part of the observed upturn in productivity is a result of changes in efficiency.     

Monopsony power and the existence of natural monopoly in energy utilities

The justification for price and entry regulation of firms hinges on whether the firms are natural monopolies, and empirical tests have been used to determine the natural monopoly status of public utilities. However, these tests are biased if the utilities possess monopsony power - a likely case. The bias is against finding natural monopoly status, which can lead to improper policies. An alternative method of testing is proposed which eliminates the bias.     

Productivity in the tourism industry

This paper analyzes the efficiency of a Portuguese public-owned hotel chain, Enatur. It applies data envelopment analysis (DEA) to estimate total factor productivity (TFP) change, while breaking it down into technical efficiency and technological change. The benchmarking procedure used is an internal one, which compares hotels with each other. For the period 1999–2001, the hotels are ranked according to their total productivity change. It is concluded that some hotels experienced productivity growth, while others faced a decline. Some implications beneficial for managerial policies were drawn from this study.     

Productivity Convergence in European Manufacturing

The paper empirically investigates international productivity convergence in the manufacturing sector, which was found not converging in earlier studies. The authors analyze subsectors of aggregate manufacturing in order to compare similar technologies and to avoid the mixing of converging and nonconverging subsectors in the aggregate. Some of the subsectors converge while others, as well as aggregate manufacturing, do not. There is stronger evidence of convergence in subsectors with a smaller number of different industries. The latter serves as a proxy for the variety of technologies. Overall, the results highlight the importance of comparing similar technologies when studying productivity convergence.     

Unemployment rate cycles in Europe

This article analyses the duration of cycles in the unemployment rate series in a group of EU countries. It extends the model by Bierens (2001) and follows Gil-Alana (2001) by allowing for fractional cyclical integration. Once cycles are introduced in the model, we have more evidence of mean reversion than in previous studies.     

Revision of conjectures about the opponent’s utilities in signaling games

In this paper we apply the concept of preference conjecture equilibrium introduced in Perea (2005) to signaling games and show its relation to sequential equilibrium. We introduce the concept of minimum revision equilibrium and show how this can be interpreted as a refinement of sequential equilibrium     

Credit cycles in a Neo-Austrian economy

This paper discusses the relationship between firms’ access to credit market and business fluctuations in a sequential Neo-Austrian economy. Existence of cycles reflects a fundamental distortion in the intertemporal structure of production, that is a lack of coordination between utilization of productive capacity and construction of new machines. The role of credit market institutions is to sustain viability of the economy along an out-of-equilibrium transition. Allowing for a high degree of price flexibility turns out not to be a general response to boosts in capital accumulation and employment. When we focus on an irreversible, off-equilibrium dynamics the coordination of policy interventions becomes a relevant tool to govern fluctuations.     

Majority cycles in a multi-dimensional setting

Summary. We consider a set of alternatives (electoral platforms, bills, etc. ...) defined as a Cartesian product of k finite discrete sets. We assume that the preferences of the individuals (voters) are marginally single-peaked and separable. The main result of this paper states that the pairwise majority relation satisfies these two properties but that it might exhibit several cycles. This result is important when related to classical problems of multi-dimensional decisions such as logrolling and vote trading. We relate our result with a continuous version of it (McKelvey, 1976). Received: March 21, 2000; revised version: April 12, 2001     

Electronics and growth cycles in Singapore

With the help of spectral and structural time series analyses it is found that the demand for electronics in the USA goes through a cycle with a period of about four to five years. Because of the synchronized nature of the electronics market, the global demand for electronics is likely to follow a similar cycle. The electronics cycle is unlikely to be caused by a regular business cycle. The major cause of the electronics cycle appears to be a product cycle which results from the introduction of new products to the market. As a result countries like Singapore which depend heavily on electronics exports may face roller coaster rides, especially in their manufacturing growth. Product diversification is the best solution to the problem.     

中国全要素生产率的估算:1979—2004

本文在分析比较了全要素生产率四种估算方法的基础上,估算出我国1979—2004年间的全要素生产率增长率,并对我国全要素生产率增长和经济增长源泉做了简要分析。分析表明(1)1993年以前,我国的全要素生产率增长率总体呈现出涨跌互现的波动情形且波动较为剧烈频繁,1993年以来,则呈现出逐年下降趋势,直到2000年才得以缓解,此后全要素生产率增长率总体呈现出逐年攀升势头;(2)1979—2004年间我国全要素生产率增长率及其对经济增长的贡献率较低,表明我国经济增长主要依赖于要素投入增长,是一种较为典型的投入型增长方式;(3)我国全要素生产率增长率较低的原因在于技术进步率偏低、生产能力没有得到充分利用、技术效率低下和资源配置不尽合理。     

Sectoral trends and cycles in Germany

We examine the comovements between the output indexes of three German sectors (manufacturing, mining, and agriculture) and the three corresponding sectoral stock market indexes. It is found that data with and without seasonal adjustment give mixed results on the long-run interaction between the sectoral indexes. Compared with data that are non-seasonally adjusted, the adjusted data offer weaker evidence on the cointegration relationship between a) the sectoral output indexes, b) sectoral stock indexes, and c) individual pairs of real and financial indexes. On short-run comovement, seasonally adjusted data offer stronger evidence on the presence of common synchronized and non-synchronized cyclical components. First version received: March 2000/Final version received: September 2001 RID="*" ID="*"  We would like to thank Michael Dooley, Juergen von Hagen, Kenneth Kletzer, Peter Kugler, Jacky So and two anonymous referees, as well as the participants of the Fifth Global Finance Conference in Mexico City, the seminars at the University of California at Santa Cruz, University of Munich, and University of Basel for their helpful comments and suggestions. This research was supported by CGES at UC Berkeley and UC Santa Cruz faculty research funds.     

Productivity and financial support in academic bioscience

Despite widespread awareness that scientific record and grant funding reinforce one another, empirical models of scientific production normally consider laboratory inputs to be exogenous. The present article employs a cross-section of academic bioscientists to examine the mutual relationship between research output and financial support. Information's nonrival character is such that scientific output and funding success cannot be expressed in strictly supply-and-demand terms. We find the typical bioscience laboratory to operate in a range of decreasing returns to scale and to over-invest in laboratory equipment and materials. Publication and funding success strongly reinforce one another, explaining the right-skewed success distributions often observed in science.     

EQ-5D health utilities: exploring ways to improve upon responsiveness in psoriasis

Aims: To determine if EuroQoL 5-Dimension Health Questionnaire (EQ-5D) health utility scores were able to discriminate among different levels of improvement in psoriasis severity following therapy.

Materials and methods: Data were from three placebo-controlled phase 3 ixekizumab studies (UNCOVER-1, UNCOVER-2, and UNCOVER-3) with patients who had baseline Dermatology Life Quality Index scores >10 (DLQI >10). Psoriasis severity (Psoriasis Area and Severity Index [PASI]), general health utility (EQ-5D), and psoriasis-specific utility (EQ-PSO, UNCOVER-3 only) were assessed. EQ-5D-5L utility scores were generated using the England EQ-5D-5L value set, a crosswalk applied to the EQ-5D-3L United States (US) and United Kingdom (UK) value sets, and a regression-based exploratory scoring function for the EQ-PSO (UK). Analysis of variance was used to estimate change in EQ-5D-5L from baseline to Week 12 per PASI improvement level: PASI <50, PASI 50 to <75, PASI 75 to <90, PASI 90 to <100, and PASI 100. Missing data were imputed using the last observation carried forward method. Value sets for the UK, England, and the US were applied.

Results: In total, 2085 patients across UNCOVER-1, UNCOVER-2, and UNCOVER-3 had baseline DLQI >10 and available utility scores. At Week 12, mean EQ-5D utility scores increased with increasing PASI improvement levels (p?n?=?645; PASI 90 to <100: 0.141, PASI 100: 0.200; adjusted p?=?0.043).

Limitations: EQ-5D-5L index-based scores have limited ability to differentiate among psoriasis patients at the highest PASI improvement levels.

ConclusionsL Adding psoriasis-specific EQ-PSO dimensions to the EQ-5D may enhance responsiveness to improvement in skin clarity at the highest PASI levels, and, therefore, generate utility scores that better reflect treatment benefit in cost-utility models.     

Indeterminacy and cycles in two-sector discrete-time model

Summary. We consider a discrete-time two-sector Cobb-Douglas economy with positive sector specific external effects. We show that indeterminacy of steady states and cycles can easily arise with constant or decreasing social returns to scale, and very small market imperfections. This is in sharp contrast with most of the contributions in the literature in which increasing social returns are required to generate indeterminacy. Received: July 31, 2000; revised version: June 5, 2001     

Common factors in Latin America's business cycles

We develop a common factor approach to reconstruct new business cycle indices for Argentina, Brazil, Chile, and Mexico (“LAC-4”) from a new dataset spanning 135 years. We establish the robustness of our indices through extensive testing and use them to explore business cycle properties in LAC-4 across outward- and inward-looking policy regimes. We find that output persistence in LAC-4 has been consistently high across regimes, whereas volatility has been markedly time-varying but without displaying a clear-cut relationship with openness. We also find a sizeable common regional factor driven by output and interest rates in advanced countries, including during inward-looking regimes.