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Investor response to tariff options under regulation by contract: Evidence from Russian heating concessions

Svetlana Avdasheva and Victoria Gimadi

Utilities Policy, 2019, vol. 57, issue C, 67-74

Abstract: Governments rarely provide a menu of tariff options for selection by regulated entities. There is a lack of systematic evidence on investor preferences towards different tariff setting. We use a dataset of concessions tenders in Russian heating during the 2014–2015 period to test hypotheses about the preferences of investors towards different tariff combinations. We found that long-term tariffs increase the attractiveness of a concession. While an increase in the price cap does not attract investors, an increase in the rate of return does. Investors make a choice in favor of tariffs with low-powered incentives.

Keywords: Tariffs; Heating; Concession (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:juipol:v:57:y:2019:i:c:p:67-74