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Price Regulation and Risk

The Impact of Regulation System Shifts on Risk Components

  • Book
  • © 2010

Overview

Authors:
  1. Michael Hierzenberger

    1. Graz, Austria

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  • Important and up-to-date topic
  • International secondary analysis
  • Detailed Primary Study
  • Includes supplementary material: sn.pub/extras

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

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Table of contents (6 chapters)

  1. Front Matter

    Pages i-x
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  2. Introduction

    • Michael Hierzenberger
    Pages 1-3

  3. Capital Market-Based Calculation of the Cost of Equity

    • Michael Hierzenberger
    Pages 5-28

  4. Methods of Price Regulation

    • Michael Hierzenberger
    Pages 29-44

  5. Empirical Secondary Data Analysis

    • Michael Hierzenberger
    Pages 45-65

  6. The Primary Empirical Study

    • Michael Hierzenberger
    Pages 67-130

  7. Summary of the Work

    • Michael Hierzenberger
    Pages 131-133

  8. Back Matter

    Pages 135-140
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Keywords

About this book

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.

Authors and Affiliations

  • Graz, Austria

    Michael Hierzenberger

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