Optimal sliding scale regulation: an application to regional electricity distribution in England and Wales
Hawdon, D, Hunt, LC, Levine, P and Rickman, N (2007) Optimal sliding scale regulation: an application to regional electricity distribution in England and Wales Oxford Economic Papers, 59 (3). pp. 458-485.
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This paper examines optimal price (i.e. ‘sliding scale’) regulation of a monopoly when productivity and managerial effort are not observed. We show generally how to operationalize this model of incentive regulation and use actual data from electricity distribution in England and Wales to estimate key parameters and make welfare comparisons of sliding scale regulation with a stylized price cap regime and the First-Best (the full information case). Our method enables us to quantify technical uncertainty as faced by the electricity regulator in the 1990s and shows that there are significant welfare gains from a sliding scale relative to the stylized price cap regime.
|Divisions :||Faculty of Arts and Social Sciences > School of Economics|
|Date :||July 2007|
|Identification Number :||10.1093/oep/gpm008|
|Uncontrolled Keywords :||PRICE-CAP REGULATION, SPOT MARKET, PRIVATISATION, BEHAVIOR|
|Related URLs :|
|Additional Information :||© Oxford University Press 2007 All rights reserved. Full text not available from this repository.|
|Depositing User :||Symplectic Elements|
|Date Deposited :||19 Apr 2012 13:14|
|Last Modified :||22 Dec 2015 16:14|
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