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.
Lecture Notes in Economics and Mathematical Systems 641 Founding Editors: M. Beckmann H.P. Künzi Managing Editors: Prof. Dr. G. Fandel Fachbereich Wirtschaftswissenschaften Fernuniversität Hagen Feithstr. 140/AVZ II, 58084 Hagen, Germany Prof. Dr. W. Trockel Institut für Mathematische Wirtschaftsforschung (IMW) Universität Bielefeld Universitätsstr. 25, 33615 Bielefeld, Germany Editorial Board: H. Dawid, D. Dimitrov, A. Gerber, C-J. Haake, C. Hofmann, T. Pfeiffer, R. Slowiński, W.H.M. Zijm For further volumes: http://www.springer.com/series/300 Michael Hierzenberger Price Regulation and Risk The Impact of Regulation System Shifts on Risk Components Dr. Michael Hierzenberger Pestalozzistraße 6/13 8010 Graz Austria
[email protected] http://www.xing.com/profile/Michael_Hierzenberger The publication of this book was financially supported by the Karl-Franzens-University Graz and the government of the province of Styria, Austria ISBN 978-3-642-12046-6 e-ISBN 978-3-642-12047-3 DOI 10.1007/978-3-642-12047-3 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2010926590 # Springer-Verlag Berlin Heidelberg 2010 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Heidelberg, Germany printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com) ... Cause we are the ones that want to play Always want to go But you never want to stay And we are the ones that want to choose Always want to play But you never want to lose ... (from “Aerials” by SOAD) Dedicated to My Family. Preface The present book was written within the scope of my doctoral studies in economics at the University of Graz.1 It has been a special honor of mine to be able to write my dissertation as a visiting doctoral student at the Institute for Corporate Acc