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Incentive Regulation (incentive + regulation)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

INCENTIVE REGULATION AND THE ROLE OF CONVEXITY IN BENCHMARKING ELECTRICITY DISTRIBUTION: ECONOMISTS VERSUS ENGINEERS

ANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 2 2008
Emili GRIFELL-TATJÉ
ABSTRACT,:,This note illustrates the potential impact of the specification of a convex production technology on establishing minimal costs compared to the use of a non-convex technology when benchmarking electricity distributors. This methodological reflection is mainly motivated by recent engineering literature providing evidence for non-convexities in electricity distribution. An empirical illustration using non-parametric specifications of technology illustrates this main point using a sample of Spanish electricity distribution firms earlier analysed in Grifell-Tatjé and Lovell (2003). [source]

Separation of Regulatory Powers When Contracts Are Incomplete

JOURNAL OF PUBLIC ECONOMIC THEORY, Issue 2 2010
DAVID BARTOLINI
The investment of a regulated firm affects the service/good provided on many dimensions. Should an integrated regulator take care of them all? Or is it better to have separate regulators responsible for them? We analyze the effect of the separation of regulatory powers on the regulated firm's,ex ante,incentive to invest in a "cooperative" innovation. The effects of the innovation are not verifiable and the cost of investing is sunk, hence, there is a problem of hold-up. We find that when the innovation produces opposite effects the,ex ante,firm's incentive to invest is larger in the case of separation than in the case of integrated regulation. We also stress the risk of over-investment that the separation of regulatory powers may induce. We maintain that along with classical incentive regulation,which mainly provides incentives for the firm to be efficient,the separation of regulatory powers may play a role in providing an incentive for cooperative innovations. [source]

Die Produktivitätsentwicklung in der deutschen Stromwirtschaft in langfristiger Perspektive

PERSPEKTIVEN DER WIRTSCHAFTSPOLITIK, Issue 3 2009
Thorsten Proettel
The German regulatory commission (Bundesnetzagentur) now imposes price caps (RPI-X) on network charges in order to foster competition between power-supply companies. The price formula needed to calculate these price caps includes a so-called X-factor that quantifies expected productivity growth and inflation. Consequently, the meticulous estimation of the future productivity growth is crucial for the functioning of this form of incentive regulation. The German regulatory commission claims to base their estimates on the historical development of productivity growth in the electricity sector as a whole. To reveal the shortcomings of this approach, we show, first, that, in the second half of the 20th century, productivity growth in the German electricity sector was not constant but varied considerably over time, and, second, that productivity growth in the electricity networks was generally lower than in the electricity sector as a whole. [source]

INCENTIVE COMPATIBLE MECHANISM DESIGN AND FIRM GROWTH: EXPERIENCES FROM TELECOMMUNICATIONS SECTOR REGULATION

ANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 3 2010
Sumit K. Majumdar
ABSTRACT**:,This article evaluates the impact of the introduction of incentive regulation on firm growth among the population of local exchange carriers in the US telecommunications industry between 1988 and 2001. The results show that the rate of return method and other intermediate incentive schemes have had a negative impact on firm growth. Conversely, the introduction of pure price caps schemes had a positive and significant impact on firms' growth. These results highlight the importance of proper and appropriate incentive compatible mechanism design in motivating firms to strive for superior performance. [source]

Evaluating the British Model of Electricity Deregulation

ANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 3 2004
by Stephen Thomas
It was expected that replacement of monopolies in some areas by markets and price-setting in monopoly areas using a simple incentive formula would mean that regulation of the industry would be ,light'. This article examines how regulation has turned out in practice. It concludes that the promise of ,light' regulation has not been fulfilled. Regulation of competitive markets is a major regulatory activity, incentive regulation has evolved into a complex and intrusive form of rate-of-return, while regulation of industry structure has allowed the industry to descend into a concentrated, vertically integrated structure, at odds with the aims of the reforms. [source]