Letters and Notes

smoke stacks against blue sky
Documents

The UK’s carbon price floor policy

This year’s (2011) series of Beesley lectures was opened by Dieter Helm’s wide ranging examination of the UK government’s Electricity Market Reform (EMR) proposals and closed by Paul Dawson’s focused dissection of the carbon price support policy that has been developed alongside the EMR programme.
The opening lecture and the discussion that followed it illustrated the rather unusual state of affairs that exists in energy policymaking at the moment: there appears to be a consensus among leading economists familiar with the energy sector that the EMR proposals are badly flawed, and that they can be expected to fail.

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January 1, 2012
condor airplane on grey concrete airport
Documents

Airport-airline relationships and contracts: a proposal

The last two decades have witnessed remarkable changes in European aviation, the consequence of a series of inter-related, largely symbiotic developments. These include: airline de-regulation; the use of information technology and the internet; new managerial approaches (product unbundling and differentiation) and the commercialisation of the airport industry. The developments were symbiotic not least because de-regulation encouraged competition and entrepreneurial activity, which in turn stimulated new technology and managerial innovation; substantial increases in productivity leading to a marked fall in the real cost of air travel across a hugely expanded network of services, has been the outcome.

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January 1, 2012
ball bright close up clouds
Documents

Energy regulation: lessons from experience

The Chairman has asked us to consider two decades of regulation but, in dealing with energy regulation, I have to look much farther back into the past – some fifty years – to see the present situation in context. Regulation of the two energy utilities is bounded by much wider regulation of all the energy industries, the so-called “energy policies” that British governments have almost always had. Over the last few years, there has been a move from minimal energy policy constraints to a state in which those constraints are once again binding, indeed dominant.

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January 1, 2012
airline flight schedules on flat screen televisions
Documents

Market definition and market power in the airport sector: competition from outside the relevant market

The purpose of this note is to draw attention to a generally neglected aspect of assessing market power in the supply of airport services. It develops a point made en passant in a paper written by the current author and George Yarrow for the UK CAA in 20101. The paper stressed that, although it was the standard practice in competition assessments to define substitution possibilities from within a defined market, sources of constraint on market power also arose from substitutable products defined to lie outside the relevant market and that it was the cumulative effect of all the substitution possibilities that determined the own-price elasticity of demand for a product or service.

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December 9, 2011

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