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Institutions, Contracts and Organizations

Institutions, Contracts and Organizations

Perspectives from New Institutional Economics

Edited by Claude Ménard

This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.

Chapter 21: Why do the European Union's electricity industries continue to differ? A new institutional analysis

Jean-Michel Glachant and Dominique Finon

Subjects: economics and finance, industrial organisation, institutional economics


Why do the EU’s electricity industries continue to differ? 313 21. Why do the European Union’s electricity industries continue to differ? A new institutional analysis Jean-Michel Glachant and Dominique Finon INTRODUCTION Why do the last European directive on electricity, No. 96/92 (applicable from February 1999), and the reforms that it brought about in the 15 EU member states, not appear to be promoting a single competition-based model for the electricity industry? Why, since the new British electricity system was opened in April 1990, has not a single EU member state entirely reproduced the English deintegrated competition-based model? Are there objective factors that are likely to make the competition-based reforms among the member states of the European Union develop differently on a long-term basis? What are these differences that are resisting the unifying force of the European Union? In this chapter, we attempt to shed some light on these questions. There is a long list of factors that can explain this or that specific difference among the reforms being led by the 15 different European states (Gilbert and Kahn 1996; Midttun 1997; Glachant and Finon 2000). The main assumption of our chapter is, however, that the kernel of objective differential factors can be identified directly from the ‘new institutional analysis’ of the reforms. The technical and economic characteristics of electricity supply and demand in each country are not the only factors that have perpetuated the differences within the industry. Institutions, as well, have played a major role, since reforms...

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