Incentivising infrastructure investment: the role of regulators

Infrastructure firms in the UK are facing large investment programmes to renew ageing networks, add new capacity, or comply with more stringent environmental obligations. A number of incentive mechanisms have been adopted by regulators to facilitate the efficient delivery of investment. While some of these approaches may provide useful lessons in other regulatory contexts, it is crucial to consider industry characteristics

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Staying switched on: the cost of energy security

The UK is now at the start of a new investment cycle in energy, as generation capacity retires and indigenous gas supplies decline. The level of investment required up to 2020 is high by historical standards, and creating an environment that encourages this investment to deliver energy policy objectives will be a major challenge for the ongoing Energy Review

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State aid and innovation: how can EU rules and practice be improved?

A recent Oxera study prepared for the European Commission examines how state aid can be more effectively targeted in the field of innovation. This is in line with the Commission's desire to achieve 'less and better aid'. For the first time, the study presents criteria for assessing a wide range of market failures—crucial to measuring the likely effects of aid. Gaps in the current rules are identified, and suggestions put forward on how existing practice could be improved.

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Freedoms of the air? Liberalising aviation for the long haul

As moves towards more liberalised global air travel tentatively progress, Alex Plant, Head of Economic Policy and International Aviation, UK Civil Aviation Authority, assesses the benefits of European and US reforms to the long-standing ‘bilateral’ system, and considers the prospects of a fully competitive international market

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Harvesting a windfall: energy efficiency for households

One of the major challenges faced by the UK government in achieving its long-term climate change goals is incentivising energy efficiency at the grass roots level. Encouraging consumers to implement basic energy-saving measures—from low-energy lightbulbs to cavity-wall insulation—could lead to a significant reduction in greenhouse gas emissions. But how aware are consumers of the costs of such measures? Oxera has been measuring this ‘cost-perception gap’ as part of the government’s Energy Efficiency Innovation Review

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Voicing concerns: should voice-over-broadband services be regulated?

Voice over Internet protocol is the next big thing in telecoms, allowing telephone calls over the Internet anywhere in the world at virtually no cost. Faced with this threat, incumbent telephony providers have been launching their own voice-over-broadband services. This poses a challenge to telecoms regulators: should they set rules for the incumbents now, or stand back and see how competition develops? Regulators across the world have taken different approaches.

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Accentuating the positive: sharing financial data between banks

From 2006, all major UK banks will start sharing 'positive' data on their customers, such as details relating to loans and credit availability. Until now, only ‘negative’ data has been shared, such as that pertaining to arrears and bankruptcies. What is the likely impact of this new policy on the banking market? Will it help to reduce over-indebtedness? And what happens in other European countries?

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Protecting consumers: is competition policy enough?

Competition policy and consumer protection policy are both meant to serve consumers, but there are tensions between the two. Dr Helen Jenkins, Oxera Director, illustrates these tensions, discussing some of the recent market investigations carried out under the new competition policy framework in the UK (the Enterprise Act 2002). The remedies proposed in those investigations protect consumers, but perhaps do not go as far as a consumer protectionist approach would.

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Fine-tuning RPI – X: the impact of changing the incentives mechanism

One advantage of RPI – X regulation is the incentive it places on companies to improve efficiency. If companies operate more efficiently than assumed when prices are set, they retain the benefits for the remainder of the review period. However, the UK experience has been to make various reforms to this ‘basic’ incentive with the aim of improving productivity. Has changing these incentive mechanisms led to increased productivity in the water industry?

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Watching the watchdog: the NAO’s review of the OFT

In recent years, the powers and resources of the UK Office of Fair Trading have been significantly enhanced. Yet how effective is it as the guardian of consumer interests and fair and competitive business practices? Peter Langham and Louise Campbell of the National Audit Office discuss a new report on the OFT's organisational performance.

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Competition as a public policy tool: what is the evidence?

A key priority for the government is to increase UK productivity by extending competitive markets. Competition helps drive productivity by acting as a spur to managerial incentives and productive efficiency through ‘natural selection’ of firm entry and exit, and by promoting incentives to innovate. However, as Andrew Rees, Director, Analysis and Research, Consumer and Competition Policy, DTI, and Sasha Maguire, Economist, DTI, explain, recent evidence on these effects is perhaps less well known

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Public information, private profit: how should government agencies compete?

Public sector agencies are the largest producers of information in Europe. This information has been recognised as an under-exploited asset, worth around €68 billion per year. The European model is to charge companies for public sector information, whereas US government agencies typically distribute data for free. From a public policy perspective, what are the effects on competition and efficiency of trying to recover the costs of public information from the private sector?

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