[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v11y1997i1p41-54.html
   My bibliography  Save this article

Stranded Costs, Takings, and the Law and Economics of Implicit Constracts

Author

Listed:
  • Brennan, Timothy J
  • Boyd, James
Abstract
Economic Analysis can help resolve the stranded cost controversy that has arisen in debates over electricity market deregulation. "Stranded costs" are costs electric utilities will not recover as power markets move from protected monopolies to an open, competitive environment. We describe the stranded cost problem, its magnitude and the prominent arguments for and against recovery. An economic analysis of implicit contracts can clarify whether there should be a legal duty to compensate utility shareholders for unrecovered costs. However, efficient approaches to electricity deregulation should rely on more than analysis of contracts. The politics of deregulation, as reflected in optimal compensation for regulatory "takings" of property, also affects the desirability of stranded cost recovery. Copyright 1997 by Kluwer Academic Publishers

Suggested Citation

  • Brennan, Timothy J & Boyd, James, 1997. "Stranded Costs, Takings, and the Law and Economics of Implicit Constracts," Journal of Regulatory Economics, Springer, vol. 11(1), pages 41-54, January.
    • Handle: RePEc:kap:regeco:v:11:y:1997:i:1:p:41-54
    as

    Download full text from publisher

    File URL: http://journals.kluweronline.com/issn/0922-680X/contents
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brennan, Timothy J. & Palmer, Karen L. & Martinez, Salvador A., 2001. "Implementing Electricity Restructuring: Policies, Potholes, and Prospects," Discussion Papers 10508, Resources for the Future.
    2. Timothy J. Brennan & James Boyd, 2006. "Political Economy And The Efficiency Of Compensation For Takings," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 188-202, January.
    3. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    4. Brennan, Timothy, 2000. "The Economics of Competition Policy: Recent Developments and Cautionary Notes in Antitrust and Regulation," RFF Working Paper Series dp-00-07, Resources for the Future.
    5. Peter Cowhey & Mikhail M. Klimenko, 2000. "Telecommunications reform in developing countries after the WTO agreement on basic telecommunications services," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(2), pages 265-281.
    6. Beard, T. Randolph & Kaserman, David L. & Mayo, John W., 2003. "Regulation, competition, and the optimal recovery of stranded costs," International Journal of Industrial Organization, Elsevier, vol. 21(6), pages 831-848, June.
    7. Simshauser, Paul, 2017. "Monopoly regulation, discontinuity & stranded assets," Energy Economics, Elsevier, vol. 66(C), pages 384-398.
    8. Michele Moretto & Paola Valbonesi, 2004. "Opting-out in profit-sharing regulation," Industrial Organization 0403001, University Library of Munich, Germany.
    9. Brennan, Timothy J., 2008. "“Night of the Living Dead” or “Back to the Future”? Electric Utility Decoupling, Reviving Rate-of-Return Regulation, and Energy Efficiency," RFF Working Paper Series dp-08-27, Resources for the Future.
    10. Timothy Brennan, 2010. "Decoupling in electric utilities," Journal of Regulatory Economics, Springer, vol. 38(1), pages 49-69, August.
    11. Brennan, Tim, 2023. "The Persistence of Volumetric Pricing," RFF Working Paper Series 23-40, Resources for the Future.
    12. Christopher Decker, 2016. "Regulating networks in decline," Journal of Regulatory Economics, Springer, vol. 49(3), pages 344-370, June.
    13. Berry, S. Keith, 2002. "Generation search costs and Ramsey pricing in a partially deregulated electric utility industry," Journal of Economics and Business, Elsevier, vol. 54(3), pages 331-343.
    14. Lin, Jiang & Kahrl, Fredrich & Yuan, Jiahai & Liu, Xu & Zhang, Weirong, 2019. "Challenges and strategies for electricity market transition in China," Energy Policy, Elsevier, vol. 133(C).
    15. Cowhey, Peter & Klimenko, Mikhail M., 2001. "The WTO agreement and telecommunications policy reform," Policy Research Working Paper Series 2601, The World Bank.

    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:11:y:1997:i:1:p:41-54. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.