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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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Abstract

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.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
AuthorsEmailORCID
Hawdon, DUNSPECIFIEDUNSPECIFIED
Hunt, LCUNSPECIFIEDUNSPECIFIED
Levine, PUNSPECIFIEDUNSPECIFIED
Rickman, NUNSPECIFIEDUNSPECIFIED
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
URI: http://epubs.surrey.ac.uk/id/eprint/380523

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