Regulating Service Quality: A Survey

This article reviews the major insights of the economics literature regarding the design of service quality regulation in public utility industries. The focus is on generic service quality issues of primary relevance in the industries, which include the electricity, telecommunications, and water industries. The instruments that public utility regulators commonly employ and the manner in which the regulators employ the instruments to secure desirable levels of service quality are emphasized.JEL classification: L51, L15I am grateful to Mark Armstrong, Sanford Berg, Michael Crew, Lynne Holt, Mark Jamison, Lilia Perez-Chavolla, Paul Sotkiewicz, Dennis Weisman, and an anonymous referee for helpful comments and suggestions.     

Policy issues in the development of telecommunications

The paper examines the specific features of the telecommunications system which determine its character, and the regulatory issues which arise out of a situation of potential conflict between the telecommunications network operators (PITs) and the providers and consumers of value added services transacted on the network. It looks at the policy options available to reconcile such conflicts, and at how EC policies are shaping the future of the European telecommunications ststem. It concludes that current development in telematics are aimed mainly at business users, and that safeguards for the private custormer will be necessary in order to ensure the provision of a socially equitable service.     

Energy Consumption Changes and CO2 Emission in India During Reforms

As we know that energy consumption or fossil fuel consumption is very much linked with environmental pollution, which is known as global climate change, so more energy related activities have an adverse impact on environment.

The paper makes an analysis of the changes in India’s energy consumption and CO₂ emission during the reforms introduced by Govt. of India in mid 1991. The energy Input-Output Structural Decomposition Analysis (SDA) is used to identify the sources of energy consumption changes during the period 1991–92 to 1996–97. Results indicate that India’s energy consumption increased by 5.7% p.a. during the same period. Six different forces behind these changes are observed (i) technical changes, (ii) final demand structure, (iii) interaction term between technical change and final demand structure, (iv) changes in energy exports, (v) changes in energy imports, (vi) changes in energy change in stock. The empirical results show that the final demand structure, technical changes, and interaction term between final demand structure and technical changes have played important role. The findings of CO₂ emission revealed that the petroleum product and electricity are the dominating sectors, which are due to the direct effect of crude oil and coal respectively. So far as the intensities are concerned, electricity contributes a major part. The paper also suggests few policies for consideration.

     

Wholesale Spot Price Pass-Through

It has been proposed that, when electricity markets open to retail competition, incumbent distribution utilities should be required to sell to residential customers at wholesale spot market prices. It is argued here that this overestimates the value of spot-price sales to customers, and underestimates the costs and disadvantages of the proposed policy. Experience in San Diego illustrates the problems. But other policies such as shopping credits have deficiencies too. An alternative approach, based on transitional maximum price caps, has facilitated the development of a competitive and fully deregulated residential retail market in the United Kingdom.     

REORGANIZING ELECTRICITY SUPPLY IN NEW ZEALAND: LESSONS FOR THE UNITED STATES

The New Zealand government recently announced a rather far-reaching policy of deregulation and reorganization of certain governmental entities, including electricity generation and transmission. Electricorp, a state-owned enterprise whose actions will be subject to a standard of commercial efficiency, has been formed to take over these functions and to sell bulk power at wholesale to localized distribution entities–who then will resell it at retail. Electricorp will be unregulated but subject to antitrust jurisdiction, as will be the distribution entities. Neither Electricorp nor the distributors will have any protected monopoly status. Substantial possibilities exist for competition in both bulk power and retail power markets over the long run, and one has reason to be optimistic that antitrust can deal with the remaining monopoly issues. New Zealand's radical deregulation yields favorable inferences about the outcome of the somewhat slower deregulation of electricity in the United States.     

Oligopoly equilibria in electricity contract markets

This paper examines the implications of forward contracting on oligopoly environments by extending the model of Allaz and Vila to an environment with multiple firms and increasing marginal cost. Estimates of key parameters of this model are taken from existing electricity markets to predict the market impact of one round of public contracting, such as those seen in auctions for retail provision and resource procurement. The results imply that, when forward contracts are present, the importance of supplier concentration is greatly magnified relative to other determinants unilateral market power such as demand elasticity.      

Are false own-account workers less job satisfied than true ones?

This article compares job satisfaction of true and false own-account workers. The latter group refers to own-account workers who are employed with the same tasks by the same employer for whom they previously worked as employees. To create a valid comparable group, the former workers are defined as paid employees who independently started a new business as own-account workers. Using data drawn from the European Community Household Panel for the EU-15 and controlling for possible self-selection issues, we observe that false own-account workers, compared with true ones, have less job satisfaction in terms of type of work, number of working hours, working times, and working conditions and environment. Our results are consistent with existing policies aimed to combat false self-employment developed by many OECD countries.     

Public service and competition in the European Union

In recent years, the Treaty of the European Union and the European institutions have had a rapidly increasing impact on the reorganization of commercial public services within the Member States. The trend has been dual—toward liberalization and toward harmonization of standards and national legislations. Progress is reported and analyzed in telecommunications, rail services, and electricity. A general concern is to reconcile legitimate public service obligations with the rules of competition that are prominent in the Treaty. New forms of regulation are tested in various countries preparing for the emergence of a European regulation framework.     

Putting ‘merchants of debt’ in their place: the political economy of retail banking and credit-based financialisation in Germany

Why did household debt in Germany not increase after the year 2000? This article offers a supply-side explanation for this deviant debt trajectory by tracing the historical evolution of retail banking in the German political economy. It argues that at the end of the 1990s and in the light of European Monetary Union, profitability issues and banking fragmentation became severe enough to interrupt the path towards credit-based financialisation as prevalent among other capitalist economies. These factors interacted with a traditional lack of tools and incentives for rapid credit expansion, even though they were renegotiated in the processes of financial liberalisation, internationalisation and innovation. By employing historical-qualitative as well as statistical evidence for the argument, the paper’s contribution becomes twofold. First, it introduces and conceptualises retail banking as a focal point in the analysis of national financial systems and their transformation. Second, it complicates the standard accounts of German non-financialisation and reveals the ‘contested’ character of financial reform.     

Berlin’s electricity distribution grid: an urban energy transition in a national regulatory context

Germany has set ambitious targets to transform its energy system from being based on fossil fuels and nuclear to renewable energies, requiring electricity grids to be upgraded. As a result there is significant public pressure in some German cities to exert greater local control over electricity distribution infrastructure. A case study approach was used to investigate contestations around ownership and governance of Berlin’s electricity distribution grid. Actors at the local level perceive the national institutional framework supporting liberalised energy markets as not designed to adapt electricity distribution grids to the challenges of the Energiewende (energy turn) and to be instead hampering investment, innovation and the involvement of local actors. By analysing politics of grid ownership and governance, and emerging tensions between a national regulatory framework and more locally bounded energy system visions, our study contributes to the emerging academic debate on urban energy transitions.     

Politics,institutions, and outcomes: Electricity regulation in Argentina and Chile

Risk, whether market or political, is an important determinant of private investment decisions. One important risk, subject to control by the government, is the risk associated with the hold-up problem: governments can force utilities to shoulder burdensome taxes, to use input factors ineffectively, or to charge unprofitable rates for their service. To attract private investment governments must be able to make commitments to policies that are nonexpropriative (either to contracts that guarantee very high rates of return or to favorable regulatory policies). These commitments, of course, must be credible.

Judgments about the credibility of commitments to regulatoty policies are based upon two political factors: regulatory predictability and regime stability. Regulatory predictability implies that the regulatory process, in which prices and levels of service are set, is not arbitrary. If the condition of regulatory predictability holds, then investors can forecast their returns over time and hence can calculate the value of their investment. If there is regime stability, then there is minimal risk of wholesale changes in the way the government regulates the industry—the most extreme type of change being the denial of property rights, or expropriation. We argue that three characteristics of the regulatory process are, in turn, important determinants of regulatory predictability: agenda control, reversionary regulatory policy, and veto gates. Moreover, regime stability is also, in part, a function of these three characteristics. We examine our theory of political risk and regulatoty commitment by comparing the cases of Argentine and Chilean electricity investment and regulation.     

Product Quality and the Optimal Structure of Commodity Taxes

The comparison between ad valorem and specific taxation is among the oldest issues in formal public finance and is important for policy in the European Union (EU) and elsewhere. This paper develops and articulates simple but very general elasticity rules that characterize the optimal balance between the two in a model of endogenous product quality. These rules temper the preference for ad valorem taxation that emerges from homogeneous product models, pointing to relatively heavy reliance on whichever form of taxation has the least effect on product quality.     

Inverse probability weighting to control for censoring in a post hoc analysis of quality-adjusted survival data from a clinical trial of temsirolimus for renal cell carcinoma

Abstract

Objectives: The Belgian third-party payer wishes to set reimbursement tariffs at a level that reflects the costs of orthotic braces. This article aims to calculate production and distribution costs of a prefabricated hard neck and knee brace and to explore whether Belgian tariffs and actual retail prices correspond with estimated costs of these two braces.

Methods: The cost model considered manufacturing costs, general overheads, research and development costs, warehousing costs, profit and distribution margins. Data were gathered from manufacturers, a production site visit, desk research, a decomposition of finished products and stakeholder interviews. The price year was 2007.

Results: The cost model estimated a retail price of €55–€150 for the neck brace, depending on assumptions. The estimated retail price for the neck brace was lower than the reimbursement tariff of €194 and the actual retail price of €241. The estimated retail price of €331–€694 for the knee brace was lower than the actual retail price of €948.

Conclusions: Actual retail prices and reimbursement tariffs for a neck brace and a knee brace exceeded prices based on estimated costs. Therefore, there appears to be scope for reducing tariffs.     

Conscientious vs. ambivalent consumers: Do concerns about energy availability and climate change influence consumer behaviour?

Energy availability and climate change are interrelated concerns with economic components. They need to be addressed by policy makers and they require changes in energy consumption. This study examines whether concerns about energy availability and climate change influence consumer behaviour, policy perceptions, and beliefs about future energy consumption. This question is investigated by analysing data from the Eurobarometer 75.4, a comprehensive survey of citizens from all countries of the European Union that was conducted in June 2011 (n = 26,840). The regression results show that people concerned about climate change were significantly more likely to take action to mitigate climate change, and to be more favourably disposed towards energy policies and future changes in energy consumption, than people who were not concerned about climate change. On the other hand, people who were concerned about energy availability undertook fewer actions and neither supported energy policies nor believed in future changes in energy consumption. This surprising finding raises questions regarding the adequate communication of energy availability and policies to the public in the European Union.     

Forecasting the diffusion of photovoltaic systems in southern Europe : A learning curve approach

Most analysts disagree upon whether photovoltaic systems (PV) will be able to play an important role in the energy scenarios of the future. A few scholars also question the appropriateness of policies that envisage the use of public subsidies to stimulate the growth of this industry and to accelerate market penetration. This paper contributes to this debate by examining whether carefully designed policies may initiate a process of large-scale diffusion of grid-connected PV, even without the deployment of external subsidies. Building upon a disaggregated characterization of the electricity market, it takes endogenously into account the learning curve phenomenon and simulates the diffusion of PV building-integrated systems in five European countries. The analysis is restricted to crystalline silicon systems and is repeated under four different macroeconomic scenarios corresponding to four different energy policies. The results suggest that already today there are opportunities for PV diffusion in many islands of the Mediterranean region, which may trigger sufficient scale economies to render the technology competitive in larger markets. They also show that the diffusion process could be accelerated through the implementation of carbon-tax policies that support initial penetration. The environmental benefits (net avoided CO₂ emissions over the system life cycle) associated with the forecasted penetration are also evaluated.     

Downstream gas pricing in an era of upstream deregulation

State public service commission regulation of gas utility pricing is examined during the period of wellhead price deregulation. A model which incorporates asymmetry in price setting during a period of changing input costs is estimated. Statistical analyses suggest public service commission regulation slowed the increase in gas utility prices during periods of rising costs. Gas utility pricing was not monitored as closely when purchased gas prices fell, thereby altering the rate structure in favor of industrial customers. Federal Energy Regulatory Commission policies designed to promote competition by restructuring the transmission sector of the gas industry after 1985 appear to have suppressed retail prices in industrial markets.     

THE POSTAL SERVICE IN THE EUROPEAN UNION PUBLIC MONOPOLY OR COMPETITIVE MARKET?: A transaction cost approach

The paper discusses the relevant institutional and economic aspects of the postal service, and analyses both the arguments for abolishing the statutory monopoly and those for retaining it. The main thesis of the paper is that public and private postal services differ from each other in many aspects: transaction costs, the willingness of the customer to pay, market structure, and possibilities of substituting the service with other communication instruments. Therefore, a simple privatisation will not solve per se the efficiency problems of the service. furthermore, the European Commission, which published in 1992 a green paper on postal services, is considering the possibility of harmonising the quality of the service within the EU and gradually reducing the gap in national postal prices. This seems to be an effective device to force firms towards the greater efficiency required in a Continental market. In future, the competition will take place not so much between private firms (more interested in running the high-value segments), as between national public carriers, as shown by the phenomenon of remail.     

ORGANIZATIONAL PORTFOLIO THEORY: PERFORMANCE-DRIVEN ORGANIZATIONAL CHANGE

The article outlines some of the main ideas of a new organizational theory: organizational portfolio theory. The literature has empirically established that organizations tend not to make needed adaptive changes until they suffer a crisis of low organizational performance. Organizational portfolio theory takes this idea and constructs a theory of the conditions under which organizational performance becomes low enough for adaptive organizational change to occur. The focus is on the interaction between organizational misfit and the other causes of organizational performance. To model these interactions use is made of the concepts of risk and portfolio.     

Strategic prospective for the implementation of employment policies in the Azores

This article explains how a far-off autonomous region of Portugal lying 2700 km from Brussels decided to approach its future, notably labor. The government in the Azores applied strategic prospective, and two of its methods, MICMAC and MACTOR,¹ at three key moments in the implementation of employment policies. While providing background on Azorean public policy and the broader European context, the author describes three cases, which deal primarily with education, qualifications and mobility. Interestingly, the results of decisions made on the basis of the prospective exercises can already be measured. This underscores the real efficiency of the policies adopted and the importance of the European policies of mobility, notably within the scope of Eurodyssey, a program of professional mobility of the Assembly of European Regions, that is now led by the Azores.     

Application capability of e-business, e-business success, and organizational performance: Empirical evidence from China

Previous research efforts suggested that firms' overall e-business success tends to deliver greater organizational performance. However, few researchers examined how a firm leverages e-business investment to gain greater e-business success. Even fewer researchers investigated the different impacts of different levels of e-business success on organizational performance. This paper addresses two questions: (1) what capabilities influence a firms' ability to build e-business success and enjoy greater organizational performance, where firm-level e-business success is measured by e-business service capability and IT-enabled collaborative advantage; and (2) whether the two ways of measuring e-business success result in different impacts on organizational performance? We propose that a firm's application capability of e-business involving systems development and systems usage is positively related to a firm's overall e-business success, thus having a positive impact on organizational performance. We use survey data from 152 Chinese manufacturing firms and their B2B e-business systems participants to test our theoretical hypotheses and proposed model. The findings suggest that both systems development and systems usage have significant and positive impacts on e-business service capability, which in turn leads to greater IT-enabled collaborative advantage. This finding could be translated into the important role of a firm's application capability of e-business on e-business success. It is concluded that the application capability of e-business acts as one of the main mechanisms through which the e-business investment leads to greater e-business success. We also find that IT-enabled collaborative advantage, compared with e-business service capability, has a more significant and greater impact on organizational performance. This study extends prior e-business success research by opening up the ‘black box’ between a firm's e-business investment and its e-business success, and by distinguishing the relative impacts of e-business service capability versus IT-enabled collaborative advantage on organizational performance. Another contribution of this study is that the effect of context factors (firm size, industry, and system duration) in developing country on our proposed model.