Abstract
Entry of new firms into the electric power industry is becoming commonplace. The entrants typically are unregulated firms that compete with regulated electric utilities only in the generation stage of the latter's vertically integrated structure. Because of the asymmetric regulatory treatment of the incumbents and entrants, there is the possibility of biases either against efficient entry or for inefficient entry. A model of a vertical integrated utility subject to rate-of-return regulation is used to illustrate the biases, and several implications for regulatory policy are discussed.
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Tschirhart, J. Entry into the electric power industry. J Regul Econ 3, 27–43 (1991). https://doi.org/10.1007/BF00157609
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DOI: https://doi.org/10.1007/BF00157609