"Reforms to shipping policies must aim for liberalisation, not covert protectionism" says Henry in The Australian today (10 Dec 2010)
Click here to read the op-ed at the paper's website, or on the link below to download it.
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Ill-judged_yuletide_gift_for_shippers_and_unions.pdf
29 Dec2009
CPRS handouts will cost the country dearly
In a recent article for The Australian (29 Dec 09) Henry comments on the 264's proposed CPRS (Carbon Pollution Reduction Scheme) Read more here
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CPRS_handouts.pdf
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CPRS_handouts.pdf
23 Dec2009
An Excess of Access: An examination of Part IIIA of the Australian Trade Practices Act
In a recent issue of 'Agenda' Magazine Henry comments on Part IIIA of the Australian Trade Practices Act.
Abstract:
Part IIIA of the Australian Trade Practices Act defines circumstances in which a facility owner may be required to provide a third party with use of its facility. This paper examines what Part IIIA might be doing from an economic perspective and criticises ‘monopoly leveraging’ arguments for third-party access. It argues that the transactions costs of access are potentially significant, and can exceed any efficiency gains third-party access permits. These contentions are corroborated by reference to the long-running dispute between the Fortescue Metals Group and BHP Billiton Iron Ore over access to rail track in the Pilbara region of Western Australia.
Read Henry's article here
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excess_of_access.pdf
Abstract:
Part IIIA of the Australian Trade Practices Act defines circumstances in which a facility owner may be required to provide a third party with use of its facility. This paper examines what Part IIIA might be doing from an economic perspective and criticises ‘monopoly leveraging’ arguments for third-party access. It argues that the transactions costs of access are potentially significant, and can exceed any efficiency gains third-party access permits. These contentions are corroborated by reference to the long-running dispute between the Fortescue Metals Group and BHP Billiton Iron Ore over access to rail track in the Pilbara region of Western Australia.
Read Henry's article here
Download
excess_of_access.pdf
13 Mar2001
Regulatory Risk [Draft version]
Assets with a value of over $130 billion are regulated in Australia. We define regulatory risk as being regulation that increases the cost of servicing this capital and analyse the sources of this risk. We show that unbiased and symmetric errors will generally create asymmetric risk for the firm, that investors cannot fully diversify against this risk, and that the CAPM beta may even fall when it occurs. The paper concludes with recommendations aimed at reducing regulatory risk.
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papers-ergas-regrisk-mar01.pdf
Download
papers-ergas-regrisk-mar01.pdf
13 Jun2000
Some economic aspects of asset valuation
This paper considers the choice between historical and current value approaches and the issues involved in choosing a starting position for valuation. It then analyses the role of optimisation and reviews issues associated with the treatment of excess capacity. It concludes by drawing implications for the approaches to valuation adopted by the Australian Competition and Consumer Commission.
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papers_ergas_asset_valuation_june00.pdf
Download
papers_ergas_asset_valuation_june00.pdf
13 Jan2000
Access and interconnection in network industries
'The most important innovation (in recent regulatory policy)', notes Sir Christopher Foster, an eminent British expert in the field, 'has been the realisation that there is no compelling reason why a monopolist should have the exclusive right to use its distribution network'
Removing this exclusive right -- thereby allowing a range of firms to compete in delivering services over that distribution network -- is, however, no easy matter. Rather, it has become one of the central, but also most complex and controversial, tasks of regulatory authorities.
The essence of this task is the creation of rights of access by third parties to some part of the incumbent operator’s facilitates. This paper examines the issues which arise in the definition and implementation of these rights. The main arguments can be readily summarised.
Download
papers-ergas-access.pdf
Removing this exclusive right -- thereby allowing a range of firms to compete in delivering services over that distribution network -- is, however, no easy matter. Rather, it has become one of the central, but also most complex and controversial, tasks of regulatory authorities.
The essence of this task is the creation of rights of access by third parties to some part of the incumbent operator’s facilitates. This paper examines the issues which arise in the definition and implementation of these rights. The main arguments can be readily summarised.
Download
papers-ergas-access.pdf
13 Jan2000
L'economia delle autorità indipendenti: alcune riflessioni sui criteri di scelta degli assetti istituzionali
Gli economisti sono da lungo tempo interessati a quanto i governi dovrebbero o non dovrebbero fare - un problema descritto da Bentham come corrispondente alla definizione di "agenda" e "non agenda" per un governo. Essi hanno invece prestato minore attenzione al problema del modo in cui un governo dovrebbe agire quando è necessario farlo. Questo lavoro affronta un aspetto particolare di questo problema -ovvero la scelta degli assetti istituzionali più appropriati in relazione agli obiettivi che si intendono perseguire.
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papers-ergas-sie24.pdf
Download
papers-ergas-sie24.pdf
13 Jan2000
The Rental Cost of Sunk and Regulated Capital
Standard approaches to estimating the cost of capital are vulnerable to two errors when applied to sunk assets subject to economic regulation. First, investors in sunk assets usually have a valuable ability to delay commitment which is therefore an opportunity cost of investment. Second, economic regulation alters the distribution of returns to capital, and may do so in a way that eliminates pro…t potential but leaves some risk of losses. This paper studies the impact of, and the interaction between, these efects. A fundamental connection is established between the value of the real option to delay investment, the risk of losses under regulation and the rate of economic depreciation. A practical benefit of this analysis is that existing empirical methods for estimating real options can now be used to estimate the size of the 'investment incentive margin' that regulated firms should be allowed.
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the_rental_cost_ofSunk_and_regulated_capital.pdf
Download
the_rental_cost_ofSunk_and_regulated_capital.pdf
13 Jan2000
What is regulatory best practice?
Australia has long been an innovator in the provision and regulation of utility services. The development of the statutory authority model – one of our more successful if not necessarily more beneficial exports – was an early attempt to more sharply separate the commercial activities involved in providing service from the exercise of political and regulatory control. Even then – a century ago – the virtues of transparency, consistency and accountability were accepted in theory, albeit more rarely in practice.
In the last decade, the Australian tradition of regulatory innovation has continued, with 'incentive regulation' being at the centre of many of the initiatives taken. This conference is a timely opportunity to stand back and draw some lessons from those initiatives.
Download
papers_ergas_regulatory_99.pdf
In the last decade, the Australian tradition of regulatory innovation has continued, with 'incentive regulation' being at the centre of many of the initiatives taken. This conference is a timely opportunity to stand back and draw some lessons from those initiatives.
Download
papers_ergas_regulatory_99.pdf