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Author: Glenn Blackmon Publisher: Springer Science & Business Media ISBN: 1461527066 Category : Business & Economics Languages : en Pages : 138
Book Description
The class is theory of price regulation assumed that the regulator knows the fIrm's costs, the key piece of information that enables regulators to pressure fmns to choose appropriate behaviors. The "regulatory problem" was reduced to a mere pricing problem: the regulator's goal was to align price with marginal cost, subject to the constraint that revenues must cover costs. Elegant and important insights ensued. The most important was that regulation was inevitably a struggle to achieve second-best outcomes. (Ramsey pricing was a splendid example. ) Reality proved harsh to regulatory theory. The fmn's costs are by no means known to the regulator. At best, the regulator may know how much is currently spent to provide services, but hardly what costs would be if the fmn vigorously pursued effIciency. Even if the current cost curve were known to the regulator, technologies change so swiftly that today's costs are a very poor indicator of tomorrow's, and those are the costs that will determine the fIrm's future decisions. With the burgeoning attention to information considerations and game theory in economics, the regulator's problem of eliciting host information about cost has received considerable attention. In most cases, however, it has been in context that are both static and stylized; such analyses rarely capture many of the essential elements of real world regulatory issues. This volume represents a fresh approach. It reflects Glenn Blackmon's twin strengths, a keen analytic mind and important experience in the regulatory arena.
Author: Glenn Blackmon Publisher: Springer Science & Business Media ISBN: 1461527066 Category : Business & Economics Languages : en Pages : 138
Book Description
The class is theory of price regulation assumed that the regulator knows the fIrm's costs, the key piece of information that enables regulators to pressure fmns to choose appropriate behaviors. The "regulatory problem" was reduced to a mere pricing problem: the regulator's goal was to align price with marginal cost, subject to the constraint that revenues must cover costs. Elegant and important insights ensued. The most important was that regulation was inevitably a struggle to achieve second-best outcomes. (Ramsey pricing was a splendid example. ) Reality proved harsh to regulatory theory. The fmn's costs are by no means known to the regulator. At best, the regulator may know how much is currently spent to provide services, but hardly what costs would be if the fmn vigorously pursued effIciency. Even if the current cost curve were known to the regulator, technologies change so swiftly that today's costs are a very poor indicator of tomorrow's, and those are the costs that will determine the fIrm's future decisions. With the burgeoning attention to information considerations and game theory in economics, the regulator's problem of eliciting host information about cost has received considerable attention. In most cases, however, it has been in context that are both static and stylized; such analyses rarely capture many of the essential elements of real world regulatory issues. This volume represents a fresh approach. It reflects Glenn Blackmon's twin strengths, a keen analytic mind and important experience in the regulatory arena.
Author: Kurt A. Strasser Publisher: Praeger ISBN: Category : Business & Economics Languages : en Pages : 224
Book Description
This book proposes a new approach to the government regulation of utilities. Arguing that traditional command-and-control regulation does not encourage efficient performance, Strasser and Kohler advocate the use of an incentive-based regulatory system and offer a practical, realistic strategy for the successful implementation of such plans within the context of utility regulation. The analysis is supported by a comprehensive survey of the relevant legal materials, an overview of the literature on organization theory and institutional economics, and a survey of the latest thinking on how incentives can most effectively be paid. Strasser and Kohler begin by identifying problems associated with current regulatory techniques, demonstrating that disincentives are often built into the regulatory system. When that system has tried incentives, the authors show they have been applied in an ad hoc manner, further exacerbating the problem. In presenting the case for incentive-based regulation, the authors review the history of comprehensive incentive plans, look at what organization theory can teach us about using incentives as a regulatory strategy, and explore the effective use of incentive compensation by nonregulated companies. Strasser and Kohler then develop a strategy for implementing incentive plans in regulated utilities, showing that, in order to work, the plans must include the installation of clearly defined bonuses and penalties, specific standards of performance, the payment of bonuses to managers rather than shareholders, and reliable and complete measures of company performance. Policymakers, economists, public utility regulators, and attorneys involved in the complex arena of utility regulation will find Regulating Utilities with Management Incentives indispensable reading.
Author: Jean-Jacques Laffont Publisher: MIT Press ISBN: 9780262121743 Category : Business & Economics Languages : en Pages : 746
Book Description
Based on their work in the application of principal-agent theory to questions of regulation, Laffont and Tirole develop a synthetic approach to this field, focusing on the regulation of natural monopolies such as military contractors, utility companies and transportation authorities.
Author: Publisher: ISBN: Category : Languages : en Pages : 43
Book Description
In contemplating a regulatory approach, the challenge for regulators is to develop a model that provides incentives for utilities to engage in socially desirable behavior. In this primer, we provide guidance on this process by discussing (1) various models of economic regulation, (2) problems implementing these models, and (3) the types of incentives that various models of regulation provide electric utilities. We address five regulatory models in depth. They include cost-of-service regulation in which prudently incurred costs are reflected dollar-for-dollar in rates and four performance-based models: (1) price-cap regulation, in which ceilings are placed on the average price that a utility can charge its customers; (2) revenue-cap regulation, in which a ceiling is placed on revenues; (3) rate-of-return bandwidth regulation, in which a utilitys̀ rates are adjusted if earnings fall outside a {open_quotes}band{close_quotes} around equity returns; and (4) targeted incentives, in which a utility is given incentives to improve specific components of its operations. The primary difference between cost-of-service and performance-based approaches is the latter sever the tie between costs and prices. A sixth, {open_quotes}mixed approach{close_quotes} combines two or more of the five basic ones. In the recent past, a common mixed approach has been to combine targeted incentives with cost-of-service regulation. A common example is utilities that are subject to cost-of-service regulation are given added incentives to increase the efficiency of troubled electric-generating units.
Author: Inara Scott Publisher: ISBN: Category : Languages : en Pages : 53
Book Description
The electric utility sector is in the midst of paradigmatic change. Market forces include decreased load growth and technological advances in distributed energy resources, alongside pressures for decarbonization, and demands for increased efficiency and new utility services. Meanwhile, as the utility monopoly is undermined and profits slow, financial analysts signal increasing risk to potential utility investors. Suggestions for transforming the existing regulatory structure abound. At the broadest level, such proposals reflect an established divide between energy policy, which traditionally focuses on economics and markets, and environmental law, which is based in the protection of natural resources and ecosystems. To marry the two camps and reach the desired end-goals of both industry and environmental advocates, an integrated approach -- merging economic, regulatory, and environmental perspectives -- must be taken. A key aspect of the analysis must be the recognition that regulation create incentives, and incentive-based regulation can and should be used to further goals for the new utility system. This Article: (1) identifies regulatory and economic incentives embedded in the current utility system; (2) assesses current market trends and new utility goals; and (3) analyzes the intersection of embedded regulatory incentives and key proposals for regulatory changes in light of the new goals. It finds that proposals for regulatory change often fail to account for existing regulatory incentives, and ignore opportunities to use regulatory incentives to modify and incentivize desired utility behavior. It concludes with recommendations for ways to incorporate incentive-based regulation in proposals for new utility regulatory structures.
Author: Bente Villadsen Publisher: Academic Press ISBN: 0128125888 Category : Business & Economics Languages : en Pages : 362
Book Description
Risk and Return for Regulated Industries provides a much-needed, comprehensive review of how cost of capital risk arises and can be measured, how the special risks regulated industries face affect fair return, and the challenges that regulated industries are likely to face in the future. Rather than following the trend of broad industry introductions or textbook style reviews of utility finance, it covers the topics of most interest to regulators, regulated companies, regulatory lawyers, and rate-of-return analysts in all countries. Accordingly, the book also includes case studies about various countries and discussions of the lessons international regulatory procedures can offer. Presents a unified treatment of the regulatory principles and practices used to assess the required return on capital Addresses current practices before exploring the ways methods play out in practice, including irregularities, shortcomings, and concerns for the future Focuses on developed economies instead of providing a comprehensive global reviews Foreword by Stewart C. Myers
Author: Glenn Blackmon
Author: Glenn Blackmon
Author: Bobby Glenn Blackmon
Author: Kurt A. Strasser
Author: Christopher R. Knittel
Author: Christopher R. Knittel
Author: Jean-Jacques Laffont
Author: 
Author: Inara Scott
Author: Damayanti Ghosh
Author: Bente Villadsen