Competition and Regulation Times. November 2005. Issue 18.

Abstract

• Title: Electrifying reform Abstract: New Zealand is not alone in having reformed and re-reformed its electricity sector, and in grappling with the questions of industry governance. While our electricity system is isolated from others, its reform has benefited from the thinking applied elsewhere - and early on it contributed to that thinking. But the direction of New Zealand's re-reforms is starting to appear increasingly isolated. Richard Meade argues that the recent course of reforms diverges from practice elsewhere, hinders private investment, and risks an inevitable reversion to state ownership and central planning. Author: Richard Meade
• Title: Capital...taxed away Abstract: The 2005 budget announced plans for a new tax to be levied on the change in accrued value of foreign investments, irrespective of whether these gains are realised or not. Massey University's Lawrence Rose and Martin Young argue that this policy is likely to have some considerable cost. Author: Lawrence Rose, Martin Young
• Title: Changing attitudes to network pricing regulation Abstract: Severe power outages across major industrialised countries have changed the attitudes of many governments and regulators to the pricing regulation of their electricity network businesses. Margaret Beardow looks at why, and what it means. Author: Margaret Beardow
• Title: Creative destruction and productivity growth Abstract: In issue 16, Competition & Regulation Times reported on John McMillan's effort to evaluate the various market conditions that impinge on creative destruction in New Zealand. Now David Law, Nathan McLellan and Bob Buckle highlight the results of recent Treasury research into the impact of creative destruction on aggregate productivity growth. Author: Robert A. Buckle, Nathan McLellan, David Law
• Title: Take this job and hedge it: human capital and portfolio theory Abstract: Why do investment professionals consistently offer advice that differs in systematic ways from that implied by portfolio theory? Are advisers ignorant of theory, or do they implicitly understand the importance of features that theory ignores? Glenn Boyle summarises some recent ISCR research that takes up these questions - and looks at human capital as the missing link. Author: Glenn Boyle
• Title: Insider trading curbed by legislation Abstract: It's well known that insider trading can result in financial market distortions and inefficiencies such as lack of investor confidence, reduced participation, and higher risk premiums demanded by those who continue to participate. These distortions and inefficiencies often appear intractable - especially so in New Zealand. But recent work by Aaron Gilbert, Alireza Tourani-Rad and Tomasz Piotr Wisniewski suggests that the Securities Market Amendment Act 2002 is beginning to make a difference. The authors report on their research. Author: Aaron Gilbert, Alireza Tourani-Rad, Tomasz Piotr Wisniewski
• Title: Want to predict the future? Ask the market? Abstract: When a prediction about the outcome of some future event or decision is needed, the typical response is to conduct an opinion poll or consult with expert analysts. But, as ISCR's Glenn Boyle and Steen Videbeck point out, it may be better to seek the market's opinion. Author: Glenn Boyle, Steen Videbeck
• Title: Motivating agent effort in a competitive environment Abstract: In the investment-fund life-insurance and cellular phone industries, sales agents' contracts include both commission payments for sales and clawbacks of those payments if the clients are not retained. Neil Quigley, Ignatius Hortsmann and Frank Mathewson explain why - and they also show how a major shift in market conditions changed the structure of these contracts. Author: Neil Quigley, Ignatius Hortsmann, Frank Mathewson