The New Zealand Institute for the Study of Competition and Regulation · ISCR

Permanent URI for this collectionhttps://ir.wgtn.ac.nz/handle/123456789/30540

Information on the Institute for the Study of Competition and Regulation

Founded in 1998 and closed in 2015, the Institute for the Study of Competition and Regulation (ISCR) was an independent, nonprofit research institute located at Victoria University of Wellington's Pipitea Campus. Funding of its activities was provided by members, project work, and research grants. The primary objectives of ISCR research were to assist in understanding:

how markets and organisations operate
how markets provide appropriate incentives and disciplines for organisations
the limitations of markets, and the role of regulation in addressing these limitations
the importance of property rights and institutional structures in facilitating effectiveness of markets, organisations, competition, and regulation in New Zealand

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Now showing 1 - 20 of 410

Open Access
2010 PhD Conference in Economics and Business - Best Student paper/presentation award to Gabriel Fiuza de Braganca
(Te Herenga Waka—Victoria University of Wellington, 2010) de Braganca, Gabriel Fiuza
The 23rd PhD Conference was held between 17-19 November 2010 and involved 31 students from 17 different universities in Australia and New Zealand. 36 discussants from 21 universities and government institutions throughout Australia contributed to the success of the conference. The PhD students the discussants faculty from the Research School of Economics and other economists from around the Australian National University kept attendance at high levels and generated interesting and stimulating discussion around the paper presentations. Many participants commented that the general level of quality of students' papers was very high. In an improvement on past conferences a committee was appointed to judge the best student paper/presentation in an impartial and professional way. Renee Fry of the Australian National University chaired the committee which also consisted of Jennifer Foster of the University of New South Wales Laurent Pauwels of the University of Sydney and Graeme Wells of the University of Tasmania. In the end two papers were chosen for the prize: Gabriel Fiuza de Braganca PhD Student with ISCR/SEF at Victoria University of Wellington. 'Can Market Power in the Electricity Spot Market Translate into Market Power in the Hedge Market?' Jason Ng Monash University. 'Non-Parametric Estimation of Forecast Distributions in Non-Gaussian State Space Models.'
Open Access
ACC Stocktake: Opportunities for Improvement
(Te Herenga Waka—Victoria University of Wellington, 2011) Quigley, Neil
In December 2010 the Government released the report of the group established to undertake the Stocktake of the ACC Accounts titled "Accident Compensation Services in New Zealand: The Performance of the ACC Scheme and Opportunities for Improvement". This seminar will cover those aspects of this report that relate to the structure of the ACC scheme and in particular provide an economic analysis of the approach adopted in the original Woodhouse report: public monopoly provision segmentation from other insurance markets the boundaries established between accidents health and social welfare the distinction between social welfare social insurance and private insurance schemes and premiums that fully fund the cost of accidents.Neil Quigley is Professor of Economics and Deputy Vice-Chancellor (Research) at Victoria University of Wellington. He was a member of the ACC Stocktake group and the author of its reports.
Open Access
Accessibility, commuting and the car ownership decision
(Te Herenga Waka—Victoria University of Wellington, 2013) Mairead De Roiste; Daglish, Toby; Yigit Saglam; Richard Law
Rising fuel prices, costly transport infrastructure, congestion, external environmental impacts and impending peak oil difficulties highlight the importance of understanding the economic decisions behind commuting patterns. Where a person lives and works are important factors in an individual's transport decision and are key determinants for car ownership. However these spatial factors are interlinked and an individuals residential location is also determined by where they work and their transport choices among other factors. Households are also likely to compromise on their commuting, car ownership and residential choices according to the needs of multiple members of the household.
Open Access
The Accident Compensation Scheme and Unfunded Liability
(Te Herenga Waka—Victoria University of Wellington, 1998) Evans, Lewis
The ACC is currently funded on a pay-as-you-go (pay-go) basis. This means that levies on participants in the scheme cover only its current period operating costs. In the past these costs have been lower than the amount required to fully fund the cost of the new claims being added to the ACC each year. This has created a $7.5 billion unfunded liability that the government must address as part of any long term reform of the ACC. The introduction of competitive private delivery of the Employers' Account of the ACC requires that all future participation by employers be on a fully funded premium basis. What should the government do with the unfunded liability of the Employers' Account at the time that competition is introduced? This paper argues that if the government wants to create an efficient accident compensation market for employers it should not levy current employers for this unfunded liability. The government should not in any way entangle the funding of past liabilities with the operation of the ongoing competitive market.
Open Access
Accident Compensation: The Role of Incentive Consumer Choice and Competition
(Te Herenga Waka—Victoria University of Wellington, 2003) Quigley, Neil; Evans, Lewis
With the exception of the introduction of experience-rated premiums the incorporation of the term "insurance" in the title of the 1992 legislation and the short-lived reforms to the structure of workplace accident compensation in 1998 New Zealand's accident compensation scheme has continued to adhere to the principles laid down in the Woodhouse Report. In particular public monopoly provision comprehensive coverage and mandatory purchase separation from other segments of the market for personal risk (where private insurance companies operate) and cross-subsidies between different categories of insured risk were explicit components of Woodhouse's conception of the scheme. Retention of these aspects of the scheme has been justified by the claim that accident compensation is a component of the social welfare net rather than an insurance scheme and that the social welfare approach is superior from the point of view of those covered by the scheme.This paper reviews three of the economic issues raised by the structure of our accident compensation scheme: the role of incentives the relationship with the broader insurance market and the costs of government monopoly provision. We use our analysis of these issues to consider the veracity of the claim that potential accident victims in New Zealand benefit from our adherence to the principles laid out by the Woodhouse Report. We conclude that the current structure of our scheme creates perverse incentives that substantially reduce its efficiency while also denying those covered by the scheme the potential benefits that would come from consumer choice among competing providers offering a broader range of risk products.
Open Access
Achieving Efficiency in Water Allocation: A Review of Domestic and International Practices
(Te Herenga Waka—Victoria University of Wellington, 2003) Counsell, Kevin
As populations grow and demand for clean water increases managing and allocating scarce water resources is becoming an increasingly important task. A vital part of this task is establishing the appropriate framework for the water sector which includes establishing effective property rights to water and the appropriate institutional arrangements to allocate these rights. In this paper we outline the current framework for water allocation and management in New Zealand. We identify a number of issues with the current framework and arguethat these issues are significant enough to warrant consideration of possible alternatives. The obvious firrst place to look for alternative approaches is at overseas arrangements particularly in countries with recent experience in the reform of their water sectors. We outline the arrangements for a number of countries and establish lessons for New Zealand. Although there is no single model of best practice that we identify some basic principles of good water management that will generate benefits for New Zealand.
Open Access
The Administration of New Zealand Irrigation: History and Analysis
(Te Herenga Waka—Victoria University of Wellington, 2007) Le Prou, Rene
The sharply contrasting ways in which community irrigation schemes in New Zealand were developed and managed before and after 1990 illustrate the operation of decentralised vis-à-vis centralised (planning) industry governance systems. While the evidence is not easily quantifiable, what evidence there is suggests that the shift to a decentralised system that took place about 1990 coincides with improved irrigation efficiency. NZ irrigation thus provides an example of the global move away from centrally planned systems and illustrates the important elements of well functioning decentralised systems. Today, farmer owned companies - rather than State owned - are responsible and accountable for scheme development and management. In combination with the RMA - which enables a decentralised approach to resource use - this has facilitated innovation in scheme design, more efficient management, and better water use. It has also revealed more precisely the value of water in irrigation.
Open Access
The Administration of New Zealand Irrigation: History and Analysis
(Te Herenga Waka—Victoria University of Wellington, 2007) Le, Rene Prou
The sharply contrasting ways in which community irrigation schemes in New Zealand were developed and managed before and after 1990 illustrate the operation of decentralised vis-à-vis centralised (planning) industry governance systems. While the evidence is not easily quantifiable what evidence there is suggests that the shift to a decentralised system that took place about 1990 coincides with improved irrigation efficiency. NZ irrigation thus provides an example of the global move away from centrally planned systems and illustrates the important elements of well functioning decentralised systems. Today farmer owned companies - rather than State owned - are responsible and accountable for scheme development and management. In combination with the RMA - which enables a decentralised approach to resource use - this has facilitated innovation in scheme design more efficient management and better water use. It has also revealed more precisely the value of water in irrigation.
Open Access
Ageing infrastructure investment: 'wall of wire' or 'wall of confusion'? What are the issues and what do they tell us?
(Te Herenga Waka—Victoria University of Wellington, 2008) Beardow, Margaret; Grace-Webb, Eli
When network regulation was introduced in New Zealand the implications for investment on ageing assets went largely unrecognised. Consequently even though wide-ranging power outages have signalled the need for substantial replacement investment in infrastructure there is no 'replacement investment' model in the regulatory tool kit. Consequently there is an emerging belief that ageing assets are replaced on basis of age - the "Wall of Wire" - but this is not generally the case. This seminar argues that there is no need to re-invent the wheel with age-centric replacement models: robust engineering models for measuring efficient and prudent replacement investment already exist. An outline of a typical probability model will be presented some discussion on its provenance and a likely application in regulatory price setting will be proposed.
Open Access
Agency Contracts with Long-Term Customer Relationships
(Te Herenga Waka—Victoria University of Wellington, 2005) Quigley, Neil; Hortsmann, Ignatius; Mathewson, Frank
In certain types of industries contracts for sales agents include both commission payments for sales and clawbacks of these payments if existing clients are not retained. This paper provides a model that shows that contracts with these features arise in equilibrium in environments having: i) up-front selling costs that are re-couped from on-going sales ii) heterogeneous customers iii) limited sales agent access to capital markets and iv) imperfect commitment by customers and agents to long-term contracts. We test the model using information on insurance sales agent contracts in New Zealand prior to and after bank entry into the insurance sales market. Increased policy lapse rates for traditional insurances post bank entry indicate that banks were cream-skimming customers. Our model predicts that in this case bank entry should reduce the value of both initial commissions paid for sales and the clawback for policy lapses. The data support this prediction.
Open Access
Allocating Water among Competing Uses: The Potential for Water Markets in New Zealand
(Te Herenga Waka—Victoria University of Wellington, 2008) Goemans, Chris
New Zealand benefits from a relative abundance of water. However both geographically and temporally New Zealand's water resources are unevenly distributed. Water markets have been promoted as a means of efficiently reallocating water amidst growing demands. The effectiveness of a particular water market is highly dependent on the institutional administrative and physical characteristics of that market. This seminar discusses the potential for water markets in New Zealand given the current administrative and institutional guidelines governing the allocation of water resources. Comparisons are made with three distinct Colorado water markets to provide insight into potential opportunities.
Open Access
The Allocation of Water by the New Zealand Electricity Market: effects of particular climatic changes' presented by Lew Evans for MOTU on 8 Nov at BP House, Wellington
(Te Herenga Waka—Victoria University of Wellington, 2012) Evans, Lew
This seminar shows the way the electricity market utilises river flows and the effect of changes in characteristics of these flows on the production and consumption of electricity. It shows how the reservoirs and non-hydro generation are utilised in generation decisions, to shift water use over time to meet seasonal and daily peak consumer demands. It explains how characteristics of the river flow and changes in them are translated into longer term, hedge and retail prices.
Open Access
Alternating Currents or Counter-Revolution? Contemporary Electricity Reform in New Zealand, VUW Press 2005 , 1-346
(Te Herenga Waka—Victoria University of Wellington, 2009) Evans, Lewis; Meade, Richard
The authors place New Zealands current institutional arrangements for its electricity sector within the context of successive waves of economic reform. They compare these arrangements with developments internationally, drawing together lessons for future policymaking both in New Zealand and overseas. This book is a work of political economy that carefully analyses the interplay between technology, economics and politics that has at different times driven the sector. Controversially, the authors argue that the market reforms of the 1980s and 1990s provided greater supply security than the more centralised arrangements that prevailed in the past - and that New Zealands reversion to more centralised and political control since the late 1990s has resulted in an unsustainable half-way house that hinders private electricity investment and reinforces this trend. Themes of the book are: Does electricity sector liberalisation help politicians, power companies and consumers? Will central planning or market forces be more likely to ensure supply security? Is regulation or ownership the best way to protect consumers from electricity monopolies? Can electricity reforms succeed with centralised transmission planning? What can be learned from 20 years of electricity reform in New Zealand?
Open Access
An Analysis of State Aid from Europe to New Zealand
(Te Herenga Waka—Victoria University of Wellington, 2005) Karel, Annemieke
Where state aid is distorting competition and creating inefficiencies it should and can be (self-)regulated. The European system of external monitoring and disciplines that the countries within the European Union are agreeing to have imposed on themselves has proven to reduce state aid levels and thereby increase overall welfare. Other than those that stem from its WTO commitments New Zealand has no such monitoring mechanisms or disciplines yet does as do many other countries provide state aid in various forms across different sectors of the economy including public services. It is therefore important to understand the rationales behind the provision of different types of state aid as well as its potentially negative effects on welfare. The European experience can then function as a benchmark for New Zealand and other countries in the Asia-Pacific region when considering the design of state aid rules in the future.
Open Access
An Analysis of the Reserve Bank of New Zealand's Policy on the Incorporation of Foreign Banks
(Te Herenga Waka—Victoria University of Wellington, 2002) Quigley, Neil; Evans, Lewis
In this study we analyse the objectives underlying the Reserve Bank's policy ofmandatory local incorporation and provide an assessment of the effectiveness of the policy in meeting these objectives. We review both the legal and regulatory framework within which branches of foreign banks now operate in New Zealand and we review the international literature on the costs benefits and efficiency tradeoffs associated with a policy of mandatory local incorporation. We consider the consistency of mandatory local incorporation with the Reserve Bank's current approach to the regulation of financial institutions and we show that the governance structure that is imposed on New Zealand banks by mandatory local incorporation is likely to reduce the efficiency of their operations. Finally we examine a number of approaches that may meet the current concerns of the RBNZ at lower cost than a policy of mandatory local incorporation.
Open Access
The Antipodean Approach: Government Funded Ultra-Fast Broadband Networks
(Te Herenga Waka—Victoria University of Wellington, 2012) Howell, Bronwyn
Bronwyn Howell presented 'The Antipodean Approach: Government Funded Ultra-Fast Broadband Networks' at the PTC Conference, Honolulu January 2012.
Open Access
Application of Cost-Benefit Analysis Under Competition Law: The Gas Enquiry
(Te Herenga Waka—Victoria University of Wellington, 2006) Evans, Lewis
Lew Evans presented Application of Cost-Benefit Analysis Under Competition Law: The Gas Enquiry at the Competition Law and Study Institute conference in Wellington in August 2006.
Open Access
Approaches to Assessing Market Power in Electricity Markets
(Te Herenga Waka—Victoria University of Wellington, 2003) Guthrie, Graeme; Videbeck, Steen
Steen Videbeck presented a half day seminar in September 2003, Measuring and developing the performance of New Zealand's power market.
Open Access
As the Lights Go Down ...Under Investment in Generating Capacity in a Deregulated Electricity Market
(Te Herenga Waka—Victoria University of Wellington, 2005) McLay, Peter
Peter McLay presented As the Lights Go Down ...Under Investment in Generating Capacity in a Deregulated Electricity Market at an ISCR seminar in March 2005.
Open Access
Assessing the Integration of Electricity Markets Using Principal Component Analysis: Network and Market Structure Effects
(Te Herenga Waka—Victoria University of Wellington, 2006) Evans, Lewis; Guthrie, Graeme; Videbeck, Steen
The major difficulties in assessing market power in electricity wholesale spot markets mean that great weight should be placed upon assessing market outcomes against the fundamental determinants of supply demand and competition. In this spirit we study whether the New Zealand market has been a national market or a set of local markets since its inception in 1996. Electricity markets generally have loop flows that require simultaneous assessment of prices at all nodes thereby limiting the informativeness of pair-wise nodal comparisons. We introduce principal component analysis to this application and show that it is a natural tool for the qualitative and quantitative assessment of the presence of local markets. We find that increased competition induced some separation into local markets that was eliminated by transmission enhancement and the introduction of generation downstream from the constrained circuits. For most of the period New Zealand has had one national market.

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