Pub Date : 2020-06-01DOI: 10.1177/1783591719888762
Rolando Fuentes, L. Hunt, H. Lopez-Ruiz, B. Manzano
Meeting climate change goals requires both the decarbonization of the electricity sector and the electrification of much of the rest of the economy. However, the electricity sector is navigating major disruptions that are changing the regulatory and business landscape. This article focuses on the question of whether these changes would help or hinder electrification, taking transportation as an example. Like the electricity sector, transportation is undergoing a deep transformation. We suggest that businesses in both sectors will at some point offer aggregated services, repackaged as subscriptions, and traded on digital platforms. We also argue that data created by these activities would be so valuable that this could be reason alone to move toward this model. This could create synergies between companies that could eventually lead to a rebound effect of electrification, with more vehicle miles traveled and more electricity consumption than before.
{"title":"The “iPhone effect”: The impact of dual technological disruptions on electrification","authors":"Rolando Fuentes, L. Hunt, H. Lopez-Ruiz, B. Manzano","doi":"10.1177/1783591719888762","DOIUrl":"https://doi.org/10.1177/1783591719888762","url":null,"abstract":"Meeting climate change goals requires both the decarbonization of the electricity sector and the electrification of much of the rest of the economy. However, the electricity sector is navigating major disruptions that are changing the regulatory and business landscape. This article focuses on the question of whether these changes would help or hinder electrification, taking transportation as an example. Like the electricity sector, transportation is undergoing a deep transformation. We suggest that businesses in both sectors will at some point offer aggregated services, repackaged as subscriptions, and traded on digital platforms. We also argue that data created by these activities would be so valuable that this could be reason alone to move toward this model. This could create synergies between companies that could eventually lead to a rebound effect of electrification, with more vehicle miles traveled and more electricity consumption than before.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591719888762","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41888719","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-04-15DOI: 10.1177/1783591720916347
Carmen Araquistain Portela
The delivery of local services is one of Swiss local governments’ main tasks and has a long tradition of public provision. In the last few decades, a shift from in-house production to the corporatization of utilities has emerged in Switzerland, but the public sector is still seen as predominant in the provision of local services. This research explores the current situation of urban utilities in Switzerland and which factors influence the opportunities for the private sector in the provision of energy services at the local level. Results show that opportunities for the private sector and disruptive actors in energy services might rely on partnerships with public institutions and on innovative services.
{"title":"Urban utilities and opportunities for the private sector in local energy services in Switzerland","authors":"Carmen Araquistain Portela","doi":"10.1177/1783591720916347","DOIUrl":"https://doi.org/10.1177/1783591720916347","url":null,"abstract":"The delivery of local services is one of Swiss local governments’ main tasks and has a long tradition of public provision. In the last few decades, a shift from in-house production to the corporatization of utilities has emerged in Switzerland, but the public sector is still seen as predominant in the provision of local services. This research explores the current situation of urban utilities in Switzerland and which factors influence the opportunities for the private sector in the provision of energy services at the local level. Results show that opportunities for the private sector and disruptive actors in energy services might rely on partnerships with public institutions and on innovative services.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591720916347","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46000117","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-03-05DOI: 10.1177/1783591720960424
Dennis L. Weisman
We employ a Cournot model with interdependent demands to explore the interaction between demand and cost complementarities in mitigating upward pricing pressure, post-merger. The analysis reveals that even substantial increases in the HHI post-merger need not raise competitive concerns when output is redistributed from single-market to multi-market providers. Furthermore, the numerical simulations indicate that there is a wide range of demand and cost complementarity parameters over which even monopolization of the market would not be expected to result in higher prices. These findings may constructively inform merger policy and provide useful context for application of the DOJ/FTC horizontal merger guidelines in an increasingly digitized (network) economy.
{"title":"Complementarities as an antitrust defense","authors":"Dennis L. Weisman","doi":"10.1177/1783591720960424","DOIUrl":"https://doi.org/10.1177/1783591720960424","url":null,"abstract":"We employ a Cournot model with interdependent demands to explore the interaction between demand and cost complementarities in mitigating upward pricing pressure, post-merger. The analysis reveals that even substantial increases in the HHI post-merger need not raise competitive concerns when output is redistributed from single-market to multi-market providers. Furthermore, the numerical simulations indicate that there is a wide range of demand and cost complementarity parameters over which even monopolization of the market would not be expected to result in higher prices. These findings may constructively inform merger policy and provide useful context for application of the DOJ/FTC horizontal merger guidelines in an increasingly digitized (network) economy.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591720960424","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42237919","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-03-04DOI: 10.1177/1783591720906582
R. Poudineh, D. Peng, Seyed Reza Mirnezami
Traditional regulatory models of natural monopoly network utilities are designed to incentivise cost-efficiency, subject to the firm achieving a certain level of reliability. With the rise of decarbonisation as a key policy goal, facilitating innovation in electricity networks has become of vital importance. Innovation and cost-efficiency may overlap and exhibit the same risk profile. However, we show that when there is a difference in their risk profile, incentivising these two tasks using the same incentive scheme is ineffective. This means incentive regulations need to be enhanced with additional modules that take into account the level of risk to which companies are exposed to for their stage of innovation activity. We also demonstrate that the issue of risk can distort the outcome of a competitive scheme for allocating innovation funds when bidders are heterogeneous in their risk attitude and there is uncertainty about recovering initial investments needed to prepare the project proposal. Thus, competitive schemes need to be designed such that they factor in risk attitude heterogeneity among bidders.
{"title":"Innovation in regulated electricity networks: Incentivising tasks with highly uncertain outcomes","authors":"R. Poudineh, D. Peng, Seyed Reza Mirnezami","doi":"10.1177/1783591720906582","DOIUrl":"https://doi.org/10.1177/1783591720906582","url":null,"abstract":"Traditional regulatory models of natural monopoly network utilities are designed to incentivise cost-efficiency, subject to the firm achieving a certain level of reliability. With the rise of decarbonisation as a key policy goal, facilitating innovation in electricity networks has become of vital importance. Innovation and cost-efficiency may overlap and exhibit the same risk profile. However, we show that when there is a difference in their risk profile, incentivising these two tasks using the same incentive scheme is ineffective. This means incentive regulations need to be enhanced with additional modules that take into account the level of risk to which companies are exposed to for their stage of innovation activity. We also demonstrate that the issue of risk can distort the outcome of a competitive scheme for allocating innovation funds when bidders are heterogeneous in their risk attitude and there is uncertainty about recovering initial investments needed to prepare the project proposal. Thus, competitive schemes need to be designed such that they factor in risk attitude heterogeneity among bidders.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591720906582","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46751314","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-03-01DOI: 10.1177/1783591719877592
A. Borquez
At the end of 2016, China and Chile increased their bilateral ties to a comprehensive strategic partnership increasingly involving the development of traditional and nontraditional foreign investments. The former is measured under the usual parameters of economic cooperation that includes horizontal and vertical investments. However, during the last decades, new forms of cooperation have emerged based on the creation of a HUB that responds to complex strategies in specific contexts, which implies the willingness of nations to establish sophisticated links in which both countries use their competitive resources in search of a common benefit. Although there is no absolute limit between traditional and nontraditional foreign direct investments, since they are not mutually exclusive, the latter have become fundamental elements in the establishment of Chinese multidimensional relations and are part of the new path of cooperation in the Latin America region. In this context, Chile is one of the countries that has hosted the largest number of hub platforms led by China in South America, which include the Southern Optical Fiber Project, the China-Chile Joint Astronomical Data Center, and the China-South America Transpacific cable. This article explores the dynamics of these initiatives through the case study of China–Chile relations.
{"title":"Exploring the nontraditional foreign investment in Sino–Latin American relations: The Chilean case","authors":"A. Borquez","doi":"10.1177/1783591719877592","DOIUrl":"https://doi.org/10.1177/1783591719877592","url":null,"abstract":"At the end of 2016, China and Chile increased their bilateral ties to a comprehensive strategic partnership increasingly involving the development of traditional and nontraditional foreign investments. The former is measured under the usual parameters of economic cooperation that includes horizontal and vertical investments. However, during the last decades, new forms of cooperation have emerged based on the creation of a HUB that responds to complex strategies in specific contexts, which implies the willingness of nations to establish sophisticated links in which both countries use their competitive resources in search of a common benefit. Although there is no absolute limit between traditional and nontraditional foreign direct investments, since they are not mutually exclusive, the latter have become fundamental elements in the establishment of Chinese multidimensional relations and are part of the new path of cooperation in the Latin America region. In this context, Chile is one of the countries that has hosted the largest number of hub platforms led by China in South America, which include the Southern Optical Fiber Project, the China-Chile Joint Astronomical Data Center, and the China-South America Transpacific cable. This article explores the dynamics of these initiatives through the case study of China–Chile relations.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591719877592","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41322441","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-03-01DOI: 10.1177/1783591720907004
Fabian Queder
Public policymakers face the challenge of maintaining incentives for investments in fiber-to-the-premises (FTTP) infrastructure while simultaneously enabling effective competition. In that regard, the ability of vertically integrated operators to discriminate against downstream rivals is regarded as a major regulatory problem, especially as policing nondiscrimination obligations is notoriously difficult for vertically integrated operators. The European regulatory framework mandates functional separation to eliminate discrimination incentives. However, this measure comes with significant drawbacks and caveats and resembles a strong market and ownership intervention. The present article discusses how voluntary vertical separation can achieve the positive effect of a vertically separated industry structure without the need for strong market interventions. We use a discounted cash flow model to compare the financial attractiveness of wholesale-only and integrated business models for a greenfield FTTP rollout. We further discuss and test how public policymakers could positively affect the profitability of a wholesale-only business model. Based on our findings, we recommend public-policymakers and national regulation authorities to proactively define separation scenarios and respective ex ante regulation reductions precisely, to make adjustments to broadband state aid programs that favor wholesale-only providers, and to critically reflect the hampering effect volume and time discount wholesale tariff structures of incumbents have on the emergence of wholesale-only networks.
{"title":"Towards a vertically separated broadband infrastructure: The potential role of voluntary separation","authors":"Fabian Queder","doi":"10.1177/1783591720907004","DOIUrl":"https://doi.org/10.1177/1783591720907004","url":null,"abstract":"Public policymakers face the challenge of maintaining incentives for investments in fiber-to-the-premises (FTTP) infrastructure while simultaneously enabling effective competition. In that regard, the ability of vertically integrated operators to discriminate against downstream rivals is regarded as a major regulatory problem, especially as policing nondiscrimination obligations is notoriously difficult for vertically integrated operators. The European regulatory framework mandates functional separation to eliminate discrimination incentives. However, this measure comes with significant drawbacks and caveats and resembles a strong market and ownership intervention. The present article discusses how voluntary vertical separation can achieve the positive effect of a vertically separated industry structure without the need for strong market interventions. We use a discounted cash flow model to compare the financial attractiveness of wholesale-only and integrated business models for a greenfield FTTP rollout. We further discuss and test how public policymakers could positively affect the profitability of a wholesale-only business model. Based on our findings, we recommend public-policymakers and national regulation authorities to proactively define separation scenarios and respective ex ante regulation reductions precisely, to make adjustments to broadband state aid programs that favor wholesale-only providers, and to critically reflect the hampering effect volume and time discount wholesale tariff structures of incumbents have on the emergence of wholesale-only networks.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591720907004","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46325882","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-03-01DOI: 10.1177/1783591719874774
L. A. Bernal Ponce, Ricardo Pérez Navarro, Mauricio Ramírez Grajeda
This article analyzes the causal relationship between China’s outward foreign direct investment (FDI) and several governance indicators by performing a panel data analysis for Latin American countries. First, a long-term relationship was found between China’s outward FDI and three governance indicator variables: control of corruption (CC), regulatory quality (QR), and government effectiveness (GE). This result supports the idea that there is a statistical relationship between FDI and the governance indicators. We also found evidence of causality from FDI to CC, implying that after Chinese investment there is a change in the host country’s perception of corruption. In addition, causality from QR and GE to FDI was found. The result is evidence of how outward FDI effects the host country government’s ability to implement policies and regulations which promote private investment and the quality of public services.
{"title":"Causality between Chinese investment in Latin America and the governance indicators","authors":"L. A. Bernal Ponce, Ricardo Pérez Navarro, Mauricio Ramírez Grajeda","doi":"10.1177/1783591719874774","DOIUrl":"https://doi.org/10.1177/1783591719874774","url":null,"abstract":"This article analyzes the causal relationship between China’s outward foreign direct investment (FDI) and several governance indicators by performing a panel data analysis for Latin American countries. First, a long-term relationship was found between China’s outward FDI and three governance indicator variables: control of corruption (CC), regulatory quality (QR), and government effectiveness (GE). This result supports the idea that there is a statistical relationship between FDI and the governance indicators. We also found evidence of causality from FDI to CC, implying that after Chinese investment there is a change in the host country’s perception of corruption. In addition, causality from QR and GE to FDI was found. The result is evidence of how outward FDI effects the host country government’s ability to implement policies and regulations which promote private investment and the quality of public services.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591719874774","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45111411","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-03-01DOI: 10.1177/1783591719853537
Francisco Valderrey, M. Montoya, Adriana Sánchez
As the Belt and Road Initiative (BRI), or the New Silk Road, as commonly known in Western countries, continues to grow in size and scope, some questions remain unanswered. Most skepticism arises about the primary purpose of the project, the contribution of members countries to the overall initiative, or the involvement of those territories that are neither touched by the land or the maritime side of the project. Latin America, for example, has significant interaction with China, but few countries may soon join the project. After taking a glance on the history of the Silk Road and the new project, we look at the current status of the BRI, and one of the main issues of concern which is the lack of homogenous contribution to the initiative. For that matter, we propose a much-needed adjustment to the BRI, using a new tool for evaluating the participation of member countries. Comparisons take into account the five collaboration variables established as the building blocks of the BRI: policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bond. To make a more detailed analysis, we include two measurement criteria per variable, which can be used either to test for suitability of new or existing members of the New Silk Road. A second issue under study is the feasibility analysis of the extension of the initiative into Latin America. We use the proposed mechanism comparing 10 active members of the BRI versus 10 countries in Latin America. Results show the adequacy of the region to join the initiative. Indeed, we demonstrate that Latin America is suitable to be the East Wind of the BRI.
{"title":"Latin America: The East Wing of the New Silk Road","authors":"Francisco Valderrey, M. Montoya, Adriana Sánchez","doi":"10.1177/1783591719853537","DOIUrl":"https://doi.org/10.1177/1783591719853537","url":null,"abstract":"As the Belt and Road Initiative (BRI), or the New Silk Road, as commonly known in Western countries, continues to grow in size and scope, some questions remain unanswered. Most skepticism arises about the primary purpose of the project, the contribution of members countries to the overall initiative, or the involvement of those territories that are neither touched by the land or the maritime side of the project. Latin America, for example, has significant interaction with China, but few countries may soon join the project. After taking a glance on the history of the Silk Road and the new project, we look at the current status of the BRI, and one of the main issues of concern which is the lack of homogenous contribution to the initiative. For that matter, we propose a much-needed adjustment to the BRI, using a new tool for evaluating the participation of member countries. Comparisons take into account the five collaboration variables established as the building blocks of the BRI: policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bond. To make a more detailed analysis, we include two measurement criteria per variable, which can be used either to test for suitability of new or existing members of the New Silk Road. A second issue under study is the feasibility analysis of the extension of the initiative into Latin America. We use the proposed mechanism comparing 10 active members of the BRI versus 10 countries in Latin America. Results show the adequacy of the region to join the initiative. Indeed, we demonstrate that Latin America is suitable to be the East Wind of the BRI.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591719853537","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45891799","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-02-25DOI: 10.1177/1783591720902922
M. Montoya, Mauricio Cervantes, Daniel Lemus-Delgado, Otto Regalado-Pezúa
{"title":"The other side of the Silk Road: Chinese investments in Latin American infrastructure","authors":"M. Montoya, Mauricio Cervantes, Daniel Lemus-Delgado, Otto Regalado-Pezúa","doi":"10.1177/1783591720902922","DOIUrl":"https://doi.org/10.1177/1783591720902922","url":null,"abstract":"","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-02-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591720902922","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46678159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-12-01DOI: 10.1177/1783591719870096
Alberto Ansuategi, I. Galarraga, Luis Orea, T. Standfuss
The Single European Sky (SES) legislation is intended to have a major impact on the fragmentation in the European Air Traffic Management and Communications, Navigation and Surveillance (ATM/CNS) system. A fundamental aspect of the SES initiative is functional airspace blocks (FABs), which have the goal of reducing the inefficiencies—in terms of safety, capacity, and cost—that result from the fragmentation of European airspace. FABs are seen as an explicit bottom-up first step toward the ultimate integration of European airspace. In this article, we focus on the analysis of the evolution of the cost-effectiveness in the provision of ATM/CNS services at FABs. We proceed in two stages. First, we develop a theoretical framework that allows us to decompose the change in cost-effectiveness of FABs into its basic sources. Second, we use stochastic frontier analysis techniques to estimate the cost equations and decompose the change in the cost-effectiveness of the nine European FABs into several components. Our analysis sheds light on (1) the drivers of changes in the air navigation service providers (ANSPs) and FABs cost-effectiveness from 2006 to 2016, (2) the role that FABs play in enhancing cooperation between ANSPs to obtain operational efficiency gains, and (3) the existence of economies of scale in the European ATM/CNS service provision.
{"title":"Analysis of cost-effectiveness in the provision of air navigation services at functional air blocks","authors":"Alberto Ansuategi, I. Galarraga, Luis Orea, T. Standfuss","doi":"10.1177/1783591719870096","DOIUrl":"https://doi.org/10.1177/1783591719870096","url":null,"abstract":"The Single European Sky (SES) legislation is intended to have a major impact on the fragmentation in the European Air Traffic Management and Communications, Navigation and Surveillance (ATM/CNS) system. A fundamental aspect of the SES initiative is functional airspace blocks (FABs), which have the goal of reducing the inefficiencies—in terms of safety, capacity, and cost—that result from the fragmentation of European airspace. FABs are seen as an explicit bottom-up first step toward the ultimate integration of European airspace. In this article, we focus on the analysis of the evolution of the cost-effectiveness in the provision of ATM/CNS services at FABs. We proceed in two stages. First, we develop a theoretical framework that allows us to decompose the change in cost-effectiveness of FABs into its basic sources. Second, we use stochastic frontier analysis techniques to estimate the cost equations and decompose the change in the cost-effectiveness of the nine European FABs into several components. Our analysis sheds light on (1) the drivers of changes in the air navigation service providers (ANSPs) and FABs cost-effectiveness from 2006 to 2016, (2) the role that FABs play in enhancing cooperation between ANSPs to obtain operational efficiency gains, and (3) the existence of economies of scale in the European ATM/CNS service provision.","PeriodicalId":38329,"journal":{"name":"Competition and Regulation in Network Industries","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/1783591719870096","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45433174","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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