Dissertation > Economic > Industrial economy > Industrial economic theory > Organization and management of industrial enterprises > Financial management and accounting

A Research on the Investment Decision of Transmission Enterprise under Rate of Return Regulation

Author ChangXinJu
Tutor YeZe
School Changsha University of Science and Technology
Course Business management
Keywords rate of return regulation investment decision A-J effect dynamic game asymmetric information
CLC F406.7
Type Master's thesis
Year 2007
Downloads 208
Quotes 1
Download Dissertation

Transmission network undertake the function of transaction platform under the power market, the investment decision of transmission enterprise is the most important factor which affects the efficiency of power market. Price policy as a regulation tool has the direct effect to the transmission investment. Rate of return as a basic price policy had apply in many counties, such as US, China, Spain, Italy, Argentina, Japan and so on. The research of the investment decision of transmission enterprise is helpful to the efficiency of power market enhancement as well as social welfare improvement.The effect of transmission investment is the outcome of investment decision of transmission enterprise. A-J effect is the most important research in the effect of transmission investment under rate of return. The A-J effect describe the transmission enterprise substitute other investment with the capital investment, and gain the incremental absolute profit. A-J effect model utilize the simple model to describe the complex processes of transmission investment, so it cannot be reflect the truth. But the study of A-J effect model affords a good study framework of the investment decision of transmission enterprise under rate of return. In this paper, we assort the investment decision of transmission enterprise into two decision, one is the decision of capacity investment, which is about the supply and demand condition. The other is the decision of efficiency investment, which is about the cost of investment. We also describe the investment process as a dynamic game process between regulator and transmission enterprise.In the game model of the investment capacity decision, we get a conclusion that the regulator will change the promise and the investor will limit the grid investment. In order to promote transmission investment behavior, regulator should change the policy tools which introduce the supply and demand factor, and make the utility function into the balance definition, and constitute elastic and believable policy. In the game model of investment efficiency decision, we also get a conclusion that regulator correct the cost parameter in the range of symmetric information, and the investor will choose the higher fixed cost parameterγand do not diligently reduces the cost, so the transmission investment has the over investment effect under the same level function. In order to promote transmission investment behavior, regulator should apply the cost audit mechanism based on the yardstick competition in the distribution and apply the merchant transmission investment in the transmission.

Related Dissertations
More Dissertations