Advertisement

© 2010

Price Regulation and Risk

The Impact of Regulation System Shifts on Risk Components

Book

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 641)

Table of contents

  1. Front Matter
    Pages i-x
  2. Michael Hierzenberger
    Pages 1-3
  3. Michael Hierzenberger
    Pages 29-44
  4. Michael Hierzenberger
    Pages 45-65
  5. Michael Hierzenberger
    Pages 67-130
  6. Michael Hierzenberger
    Pages 131-133
  7. Back Matter
    Pages 135-140

About this book

Introduction

Natural monopolies are not subject to the market-based principle of competition. Consequently, it is necessary to control companies in such monopoly positions with regard to their pricing. In the future, it will become more and more important to consider a possible change in the regulation regime when the future-oriented costs of equity - both in terms of price regulation and for conducting capital market-oriented business valuations - are to be determined. Based on the principal-agent problem, the book explains this topic. The effect of a change in the regulation regime is presented in the form of two studies: an international secondary analysis of the effects on cost of equity based on event studies of the Anglo-Saxon area and a primary analysis based on the Austrian regulation policy for electricity and gas supply systems. The two studies arrive at similar results: The change from a rate-of-return regulation to incentive regulation systems leads to a significant increase in systematic risk.

Keywords

Agency Theory Capital Market Event Study Price Regulation Valuation calculus

Authors and affiliations

  1. 1.GrazAustria

Bibliographic information

Industry Sectors
Engineering
Finance, Business & Banking