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Merchant and regulated transmission: theory, evidence and policy / Stephen Littlechild. Cambridge : Electricity Policy Research Group, 2011, 31 p. (EPRG Working Paper 1128 ; Cambridge Working Paper in Economics 1159)http://www.eprg.group.cam.ac.uk/wp-content/uploads/2011/10/EPRG-1128_Complete.pdfEconomists acknowledge the problems of regulated transmission but take different views about the likely efficiency of merchant transmission. This paper examines the evidence on alleged market failure and regulatory failure as experienced in practice in Australia and Argentina. In these examples, merchant transmission (broadly defined to include private initiatives) has generally not exhibited the standard examples of market failure but regulated transmission generally has exhibited the standard examples of regulatory failure. Imperfect information – more specifically, in the form of lack of coordination – has often been a challenge whatever the approach. Policy should therefore seek to improve the regulatory framework and to remove barriers to merchant transmission and private initiatives. An important role for regulation is tofacilitate coordination between potential providers and users oftransmission lines. (© EPRG)