Fiscal Policy & Regulation

An example of how imperfect information reduces market efficiency - and distorts markets, getting them acting in producers' and not consumers' best interests, by subverting consumer sovereignty.

Really interesting BBC article that looks at distribution theory, with the executive director or OFGEM suggesting that the regulation of the energy sector should be looking to shift the balance in favour of the consumer and away from investors.

Such a change would, it is argued, save the average consumer £45 a year. However, energy companies, such as National Grid, have suggested that it would limit their ability to invest in the sector, damaging efficiency.

The ongoing dispute between Viagogo and the Competition and Markets Authority (CMA) appears to have been resolved. For now.

The competition authorities have argued that the secondary market for tickets has been bedevilled by imperfect information, and as a result has been operating against the public interest. Other secondary ticketing sites have already complied with the demands of the CMA.

The Telegraph poses an interesting question: what does the recent OFGEM introduction of a price cap mean for the Big Six energy companies?

Well, if you read the article, I don't think you'll find out very much, other than the fact that it will be reviewed every six months. And that, of course, adds to the opportunity cost of such an intervention, which in turn makes it less likely that it will enhance outcomes for consumers.

Not that such interventions are renown for increasing efficiency... 

Government failure in the water industry? It would seem so.

This Utilitywise research into the introduction of competition to the commercial part of the water industry is a demining indictment of the relative merits of competition. As the article highlights, "the £421m estimated cost of the market overhaul has shaved just £8m in total off non-domestic water bills in the last year.".

Factor in the longer-term costs of stabilising the market, and the net welfare position doesn't seem to be a favourable one. 

Change is coming - the man responsible for the current rail review, Keith Williams, has used a speech to the industry to flag up the fact that the current franchise model "is no longer delivering clear benefits for either taxpayers or farepayers". 

And indeed that's what the latest evidence would suggest - with contracts failing and customer complaints on the rise. It will be interesting to see what the future holds for the sector. 

More on the roll out of smart meters, implying that any government rhetoric that suggests that they are going to hit their target of all homes having one by 2020 is nonsense.

Oh, and we'll have an extra £350m per week for the NHS by then too.

The National Audit Office confirms the pessimistic view of the roll out of smart meters. At the moment, the government is still well short of installing the meters it promised by 2020.

Further, the first generation of smart meters appear to be unable to cope with consumers changing suppliers - and given that the aim of the meter is to allow consumers to see how much energy that they are using and, surely, to encourage greater switching and hence improving efficiency.

The ongoing smart meter debate continues, with the Citizens Advice bureau arguing that the target for installing meters should be extended. However, other articles have suggested that their introduction itself is debatable. 

Expect more in the months to follow...