 Cost-efficiency and quality regulation of energy network utilitiesEnergy Economics, 2023, vol. 120, issue C Abstract: This paper studies linear cost-efficiency and quality incentives that are increasingly being used to regulate electricity and gas network utilities. The analysis shows that cost and quality incentives have asymmetric impacts on firms’ choices of efficiency and quality, and that the incentive powers should be equal and less than maximal when there is information asymmetry about firm costs and a dislike for network utility surplus. As in most existing regulations quality incentives have a higher power than cost-efficiency incentives, the model predicts that supplied quality is too high. Finally, the paper discusses examples of linear sliding-scale incentive regulation in Norway and Great Britain. The findings of this study provide guidance for regulators and policymakers looking to optimally use linear incentives to regulate energy network utilities. Keywords: Energy network regulation; Quality regulation; Incentive power; Incentive regulation; Energy transmission; Energy distribution (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:120:y:2023:i:c:s0140988323000865 DOI: 10.1016/j.eneco.2023.106588 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.