Natural Monopoly Research Articles

New Challenges in Times of Crisis

In the decades since the European Union’s energy policy was established, we have witnessed a process of development which has resulted in the field being regulated by the Treaty in its own legal framework and has continued to evolve to the present day. Governance at the EU level has become more important in the field of energy policy, but the crises have led to an increasing role for Member States. The EU’s single rule aims to ensure a level playing field for market players in the competitive sector, while preventing unfair competitive advantages for companies created by or benefiting from public or state resources. The EU state aid rules have undergone significant changes in the last few years. State subsidies are part of competition policy, which aims to ensure an efficient economy and consumer welfare. Among the market failures in the energy sector, the most significant disadvantage is the presence of externalities and natural monopolies. These need to be addressed through government assistance and its direct and indirect regulatory instruments. Competition law also covers economic services of general interest, which are closely linked to the issue of state subsidies. Member States have discretion to define services of general economic interest, subject only to the limits set by EU law, and to avoid manifest error of assessment. The energy packages include the term “universal service” for electricity, but not for gas, leaving it to the discretion of the Member State to decide on the latter. The crises have brought with them a breakdown of neoliberal ideas and, as a consequence, a strengthening of the tendencies in favour of state regulation. In most Member States, we are witnessing a closure, voices critical of the EU in many respects (e.g. Hungary and Poland in the context of the Art. 7 procedure) and Brexit has had a negative impact on communitarisation policies.

Model of tariff regulation of natural monopolies in the context of taking into account consumer choice

Purpose: is to develop the menu of contracts for the model of tariff regulation of natural monopolies in the areas of heat supply, water supply and sanitation, to ensure the economic security of subjects of the tariff regulation system.Methods: the article uses a systematic approach. The theoretical basis of the study is the synthesis of the theory of tariff regulation, the theory of contracts and the theory of economic security. The work also applies special methods used in calculating tariffs: economically justified costs (expenses) and tariff indexation.Results: the presented study substantiates the model of tariff (antimonopoly) regulation of subjects of natural monopolies, taking into account their economic security. Using the provisions of the contract theory, a new menu of contracts for consumers has been developed and tested, allowing them to be included in the process of influencing the size of tariffs, stimulating demand, taking into account low-level indicators in tariff regulation and solving the problem of fulfilling the production programs of monopolists.Conclusions and Relevance: existing practical and theoretical models of tariff regulation do not ensure the economic security of natural monopolies and consumers. In this regard, a substantiation of the model of tariff (antimonopoly) regulation of subjects of natural monopolies and the development of a new menu of contracts for consumers, providing for their choice of one of two types of contracts, were made. The main conclusions of the study can be used to improve the state tariff policy.

Assessing performance of water supply operation of water companies in China: A union dynamic multi-activity network data envelopment analysis

Urban growth and the increasing urban water demand highlight the importance of performance analysis in the water supply industry. Both water supply companies (WSCs) and water supply and sewage companies (WSSCs) produce and deliver potable water for city dwellers. Water authorities use benchmarks to monitor the two types of companies’ operations. The internal operation process and heterogeneities of observations were not considered for relative performance evaluation by conventional DEA models. To overcome these limitations, this study proposes a union dynamic multi-activity network data envelopment analysis (DMANDEA) model to extend static network DEA to a more general case for dynamic efficiency assessment of the water supply operations of water companies. For the first time, the model allows for the decomposition of the water supply operation into water production (WP) and water consumption (WC) substages and performance comparisons for water companies by considering their heterogeneity simultaneously. Specifically, by using a non-radial directional distance function (DDF), the inefficiencies for substages and the entire system can be both assessed dynamically. This model is applied to a sample of 246 water companies in China in 2016–2018. The overall, period, and substages’ group efficiencies, meta efficiency, and technology gap ratio (TGR) for 179 WSCs and 67 WSSCs are all provided. The empirical results reveal that: (1) the average group efficiencies of WSCs and WSSCs are 0.4567 and 0.6611, respectively. The meta efficiencies of WSCs and WSSCs are 0.4523 and 0.4703, respectively. The TGR of WSCs (0.994) is greater than that of WSSCs (0.7067). (2) WSSCs perform better than WSCs do, which suggests that economies of scope do exist in WSSCs. However, WSCs possess the best technology for water supply operations because of their high TGR. (3) The average meta efficiency for all the observed water companies (0.4572) is not optimistic, which correlates more with inefficiency in the WP stage. The causes stem from the natural monopoly, lack of competition, and relatively lower water tariffs. The Chinese water supply industry requires diversification of ownership and operation modes, and gradual increases in water tariffs. (4) Water companies in the eastern region outperform those in other regions. Regional cooperation, such as technology sharing, the transfer of managerial experience, and information exchange, needs to be emphasized.

Research of Competition in the Market of Natural Monopolies in the Novosibirsk Region

Research of Competition in the Market of Natural Monopolies in the Novosibirsk Region

Теоретичне підґрунтя публічного управління у сфері водопостачання та водовідведення

The sphere of water supply and drainage is a critically important component of the socio-economic mechanism, which is characterized by numerous challenges that were actualized in wartime. Aim of this paper is to analyze the main theoretical approaches of public management in the field of water supply and drainage in order to identify the main principles and tools that affect the efficiency and sustainability of the field. The tools of strategic planning, operational management and emergency response are considered as key components of successful management in this area. Emphasis is placed on the special role of developing fair tariff policies and financial support for infrastructure investments. The importance of the legal framework that regulates the sphere, ensuring compliance with environmental standards and protection of consumer rights is highlighted. The environmental aspect of resource management in the field, which includes modern methods of wastewater treatment and minimizing the negative impact on natural water bodies, is considered. It was emphasized that state intervention is a key factor in ensuring equal access to clean water, which is a basic human right according to the United Nations. The problem of natural monopoly in the field is considered through the prism of high capital investments and low elasticity of demand, which limit market competition. Strategies to stimulate competition and improve service quality are explored, including regulating tariffs and encouraging innovation. The example of Scotland, where water supply management is centralized through the creation of a single national company Scottish Water, reveals the effectiveness of such an approach in improving infrastructure and ensuring high quality services with public participation. The importance of a multidisciplinary approach to management in the field is emphasized, with a special emphasis on the stability of the service in wartime. The research may be useful to researchers, state and local authorities, and international organizations. Further perspectives of research include the study of the peculiarities of the application of the theoretical base in the solution of scientific and practical problems in the field in Ukraine during the war.

ANALISIS PRAKTIK MONOPOLI DALAM PEMASARAN BAHAN BAKAR AVTUR DI INDONESIA DARI PERSPEKTIF HUKUM PERSAINGAN USAHA

Competition in the aviation sector is crucial for improving quality of life and the economy. The formulation of the problem of this article is the form of government policy in the marketing of avtur fuel by PT Pertamina Patra Niaga which results in monopolistic practices and unfair business competition, and the potential exemption of PT Pertamina Patra Niaga from Articles 50(a) and 51 of Law No. 5 of 1999. Using a normative legal method with a legislative approach and descriptive nature, secondary data was obtained through literature studies and interviews with the Federation of United Pertamina Workers' Union (FSPBB). The research results and conclusions are government policies in avtur marketing by PT Pertamina Patra Niaga have created a natural monopoly harming consumers and hindering healthy competition, and exemption from Article 50(a) of Law No. 5/1999 is justified, but PT Pertamina Patra Niaga does not meet Article 51 criteria as it is not a state-owned enterprise but a subsidiary of PT Pertamina Persero.

Power grids: Is it possible to compete with a natural monopoly?

Power grids: Is it possible to compete with a natural monopoly?

Transportation system models to analyse ports competition and cooperation

Some global drivers of the shipping market, such as the carriers’ alliance consolidation process and the growing ship sizes have determined critical conditions in standalone ports in the XXI century. The traditional attitude of each port during the XX century was to consider other ports, even if they belong to the same territorial system, as competitors following the postulate of the natural monopoly of access to a territory. However, the necessity to respond to the binding requests of port users and of the ship gigantism brought to different experiences between ports belonging to the same territorial system. New forms of cooperation and competition took place at different levels. The paper presents a theoretical equilibrium model to analyse the competition and/or cooperation scenarios of two, or more, ports belonging to a territorial system. The model is based on the consolidated topological-behavioural paradigm of Transportation System Models (TSMs). The proposed equilibrium model allows to simulate the condition inside a port system, which moves from a competition attitude between ports to a cooperation one, within the same modelling framework. The model could provide to the port authorities, managers, planners and researchers a quantitative tool to understand the competition-cooperation scenarios and to define alternative strategies in relation to the decisions taken by other actors of the market.

IMPROVING APPROACHES TO DETERMINING THE LEVEL OF FILLING OF THE PIPE BODY WITH PUMPED PRODUCT

As of 2015, there were more than 200 permanent and variable gravity sections of crude oil and petroleum product pipelines in the pipeline system of PJSC Transneft, the natural monopoly for pipeline transportation of crude oil and petroleum products in the Russian Federation. The operation of gravity sections in oil pipelines in Russia is a very important safety and environmental issue, and Russian oil transportation companies are constantly working on improving approaches to monitor and control pipeline operation modes. When these sections occur, special attention is given to determining the geometric capacity of the pipeline section, as pumping is done in batches and commercial pumping product remains in the gravity section during periodic shutdowns. Due to the limited technical equipment of these sections and the likely illegal unrecorded product withdrawals in these pipeline sections, the most demanding approach is to determine the fill factor of the pipe body. The fill factor is influenced by many factors, including the presence of gas phase and water accumulations, correct geometry of the pipe body and other factors. Given the given initial data, it can be seen that the solution to the problem of determining the filling level of a stopped oil pipeline is reduced to the construction of a multifactor model. For accurate determination, in addition to the model, there is a need for relevant software, an algorithm for solving the problem ofcalculating the filling factor. Correspondingly, operating organisations need a system for accounting and control of the product filling level at these sections at the level of improvement of the state system for ensuring unity of measurements and metrological support of accounting for the long-distance pipeline transport of oil and oil products - a strategic resource, the revenues from the sale of which account for about 23 % of the budgetary system of the Russian Federation.The calculation created and proposed by the authors is divided into stages in which the initial data is sequentially collected, the voltages on the capacitors are calculated, the data is processed using the interpolation method, an image is constructed using the Newton-Gauss method, and the filling factor is calculated with various multiphase pumping products. The calculation is made based on voltage readings from sensors located orthogonally to the axis of the pipe body. Using the approximation method and the Newton-Gauss method, you can get rid of the «noise» and level the phase boundary. When tested and implemented at pipeline pumping facilities, it will be possible to clarify the existing dependences of the influence of gas phase friction on the fluid flow rate, and, therefore, evaluate the effect on the filling factor. This calculation can become a tool in the fight against illegal tappings.

Методологические проблемы оценки капиталовложений электросетевых компаний

In the article the author reveals the most significant methodological problems in this most important area, which is the basis for the reproduction of economic systems, on the basis of considering the most widely used methods of capital investment assessment. The article also provides a brief theoretical characterization of capital investments. It is concluded that the reason for methodological problems in the assessment of capital investments is the issue of the nature of capital, which has not been fully resolved in the field of fundamental economic theory. The author draws attention to the fact that the detailed methods of capital investment assessment for specific conditions of management of individual sectoral economic systems, elaborated in scientific articles, dissertations and other works, do not receive scientific generalization and balanced assessment of the community. In fact, it means that there are no methods proven and used by many researchers and practitioners. It is shown that it is inappropriate to completely identify the investment process, project appraisal and capital investments of enterprises. The author points out the gap between financial and technological efficiency existing in the theory and practice of work with investments. Further, using the example of the Russian electric power transmission industry, the author shows how general methods of capital investment assessment may not be applicable depending on specific industry conditions, and how theoretical and methodological problems in practice turn into a lack of tools for decision-making. In conclusion, based on the consideration of disproportions in the mechanism of capital investment assessment, implementation and regulation, another fundamental issue of the theory arises – the need to change approaches to the conflict of interests and regulation of natural monopolies as a non-cooperative game.

Reform, Not Revolution, is What is Needed Now for Yardstick Competition

Abstract Yardstick competition as a tool to set the prices of regional natural monopolies is now an established tool. After 30 years of application to the water industry in England and Wales, this article takes a critical look at how yardstick competition has been implemented in the latest Price Review 2019 (PR19). It proposes reforms to ensure that in the next Price Review 2024 (PR24) and/or beyond the efficiency challenges are appropriately set and the degree of information at the regulator’s disposal is maximised.

Public Assessment of the Activities of Natural Monopolies in the Novosibirsk Region

Public Assessment of the Activities of Natural Monopolies in the Novosibirsk Region

ОБЕСПЕЧЕНИЕ ЭКОНОМИЧЕСКОЙ БЕЗОПАСНОСТИ НОВЫХ СУБЪЕКТОВ РОССИЙСКОЙ ФЕДЕРАЦИИ ПУТЕМ ОКАЗАНИЯ ГОСУДАРСТВЕННОЙ ПОДДЕРЖКИ ОТРАСЛИ ЖЕЛЕЗНОДОРОЖНОГО ТРАНСПОРТА

The article examines the possibility of ensuring the economic security of the Donetsk People's Republic, Lugansk People's Republic, Zaporozhye and Kherson regions by providing measures of state support for the railway transport industry, including those aimed at ensuring the break-even of the activities of the FSUE Railways of Novorossiya. FSUE Railways of Novorossiya is a natural monopoly entity that maintains the railway system in the territories of new constituent entities of the Russian Federation, the sole owner of public railway transport infrastructure and a carrier. The relevance of the topic is due to the ongoing process of integration of new entities into the economy of the Russian Federation. The article examines the activities of the railway transport industry, the FSUE Railways of Novorossiya and their impact on the economic activities of new constituent entities of the Russian Federation. The main threats to the economic security of the FSUE Railways of Novorossiya are identified, forecasts of performance results are formed and ways to solve the main problems are proposed, which involve respecting the economic interests of all interested parties.

Regulation of Natural Monopoly: The Turkish Electricity Market

This study examines the situations that arise when regulating a natural monopoly market by focusing on Türkiye’s electricity market. Specifically, this qualitative study investigates the Energy Market Regulatory Authority (EMRA) in terms of capture theory, drawing on various documentary sources, such as electricity sector regulation legislation (constitutions, sector laws, decree-laws, Plan and Budgeting Committee documents of The Grand National Assembly of Türkiye), EMRA official decisions, newspaper reports from 2001 to 2021, and media interviews. The empirical findings discussed throughout the article reveal numerous instances consistent with the capture theory.

Individualized second stage corrections in data envelopment analysis

In the context of two-stage data envelopment analysis (DEA) for efficiency correction, we shift the focus from the common central tendency orientation in its second stage to an individually oriented procedure. We propose to evaluate the influence of contextual variables on each unit's performance relative to the other operating units. This results in an alternative approach in which the second stage inherits the principal property of DEA in the first stage of putting each individual unit in its best possible light. We demonstrate the applicability of our approach using data from the energy sector in the domain of incentive regulation, where operators are natural monopolies. In such systems of incentives, ensuring fair performance evaluations is crucial, given the influence of contextual variables beyond management control. Our approach contributes to efficiency correction procedures under these circumstances. The results not only encourage operators to economize costs and improve service quality but also motivate them to, for example, minimize environmental impact of operations, adopt eco-friendly technologies, and invest in renewable energy sources.

An empirical study on the abuse of market dominance by urban pipeline gas in 2020-2022

City pipeline gas has significant natural monopoly properties and regional characteristics. This paper sorted out the administrative law enforcement cases of abuse of market dominance in the field of urban pipeline gas in the three years from 2020 to 2022, and found that the acts of Article 17 (5) and (4) of the Anti-Monopoly Law accounted for the highest proportion, and the punishment was generally mild, and most of them were private enterprises. At the same time, the corresponding regulatory implications are studied and proposed, that is, strengthening the supervision of natural monopoly enterprises extending upstream and downstream links, introducing qualified enterprises in franchise operation, and making full use of information technology to improve regulatory capabilities and regulatory efficiency.

Brazil’s New Gas Law: Analysis, Implications, and Remuneration of Gas Processing Plants with Non-Discriminatory Access to Customers

Brazil will increasingly rely on the availability of natural gas as new discoveries in the Pre-Salt portion are explored. Currently, a substantial amount of the gas produced associated with oil is reinjected (60,84 million m³/day in 2021, according to the Ministry of Mines and Energy), with the lack of structure being one of the factors for this non-energy purpose. The New Gas Law proposes to fill this gap by stimulating investments in infrastructure. In this sense, market opening has the potential to promote the rupture of natural monopolies by providing access to infrastructure, including Natural Gas Processing Plants (NGPP). This units, in addition to conditioning the gas for sale, allow the recovery of higher molecular weight fractions, or (Natural Gas Liquid). However, the instructions for this access required by the government are insufficient for issues related to the NGL recovery efficiency of these units, as well the method of remuneration arising from the NGL production capacity. It is proposed in this paper to include a processing tariff, based on static simulation of available technological routes. Comparison of energy spent and NGL recovery efficiency will allow to formulate the gas price, unfolding from the price of the molecule.

Power market: effects of the imperfect competition.

In the current technological and economic frame the market of the electrical power [JANE05]1 is defined in the practice as a prototype of Natural Monopoly in spite of the attempts of intervention put into practice in Spain. The attempt of promotion (Board 2001/77/CE of the European Parliament and of the Advice, of September 27, 2001) of the electricity generated from renewable sources of energy in the domestic market of the electricity2 is defined as one of the policy ones of intervention faced to compensate the imperfection of the competition across the support to the establishment of new companies that act on monopolistic markets across the authorization of subsidies and/or financial and fiscal facility. The present document tackles the definition of the most significant aspects of the market of the electrical energy from the perspective of the same one as a natural monopoly and the quantification in relative terms of the loss of social well-being in environments of imperfection of the competition and mistakes of the market. The proposed conclusions define a critical stage with the current state of design of strategic and operative plans and an inefficient politics of innovation and development.

РОЗВИТОК ІНСТИТУТІВ ЗАЛІЗНИЧНОГО ТРАНСПОРТУ У КОНТЕКСТІ СТРУКТУРИЗАЦІЇ І МОДЕРНІЗАЦІЇ НАЦІОНАЛЬНОЇ ЕКОНОМІКИ

The article defines the role of railway transport as a component of the transport complex of Ukraine. It is shown that the railway industry of Ukraine, as a natural monopoly, was formed on the basis of a centralized and concentrated form of state ownership in the bowels of the administrative and command system of the Soviet Union. Emphasis is placed on the problems associated with the existence of natural monopolies inherent in railway transportation. The signs of a natural monopoly on railway transport of Ukraine are systematized: the network nature of the organization of infrastructure and the provision of transport services; the presence of barriers for new business entities to enter the rail transportation market; the need for significant investments to create an alternative transport business; low investment attractiveness for private capital due to a long payback period; low elastic demand from consumers for transport services. Emphasis is placed on the problems associated with the existence of natural monopolies inherent in railway transportation. An analysis of the strengths, weaknesses, threats and development opportunities of railway transport enterprises was carried out. Measures have been developed to demonopolize railway transport of Ukraine through a justified division of the spheres of its operation into three groups: first, naturally monopolistic; secondly, areas where competition is potentially possible; third, areas where competition is natural. The conceptual principles of carrying out organizational, financial and information restructuring in railway transport based on the integration of the functional-object system and the vertical model, tariff differentiation, the spread of two-rate tariffs, the elimination of cross-subsidization, the creation of new market segments, the expansion of the spectrum of transport and related services are substantiated. The priority areas of restructuring in railway transport in the conditions of martial law and post-war reconstruction are proposed, including within the framework of the concept of socially responsible restructuring.

ОЦЕНКА РЕЗУЛЬТАТОВ И ДАЛЬНЕЙШИХ ПЕРСПЕКТИВ ВНЕДРЕНИЯ ЭТАЛОННОГО РЕГУЛИРОВАНИЯ В ЭЛЕКТРОЭНЕРГЕТИКЕ

Since 2018, the electric power industry has been undergoing an evolutionary restructuring of approaches to the formation of regulated tariffs. In particular, the government of the Russian Federation passed a decree introducing new rules of sales markups of GESs using the analogue comparison method. It provides for normalization of operating expenses. All participants in the electricity market and state executive authorities needed to reconfigure with reference of a radical transformation of approaches to tariff regulation. The authors of the article focus on the assessments lack of the reconfiguration results and the small volume of recommendations for expanding the use of yardstick regulation. The article summarizes the results of the five-year period of the new tariff regulation approach of GESs. The authors also presented an assessment of the prospects for further use of the analogue comparison method in relation to electric grid enterprises. This was the purpose of the article. To achieve this goal, the authors analyzed the results of the switch to the analogue comparison method. In particular, the article examines changes in sales markups: an increase in the sales markup median value of GESs has been revealed by 2–3 times since 2018, depending on the group of consumers. In conclusion, the authors proposed possible tools for adjusting and fine-tuning the method of analogues comparison in relation to the GESs activities. The article also gives the author's assessment of the prospects for expanding this method to other natural monopoly segments, including electricity transmission and distribution.