Regulatory Hindsight Review and Innovation by Electric Utilities

Thomas Lyon ()

Journal of Regulatory Economics, 1995, vol. 7, issue 3, 233-54

Abstract: Regulation is often thought to discourage innovation. This problem is not evidenced by electric utility behavior up through the mid-1970s, during which time utilities adopted various new generation technologies. However, retrospective "prudence" reviews, common since the 1980s, may discourage utilities from investing in promising but risky new technologies. When innovative technologies have lower expected costs but greater cost variance than conventional technologies, the threat of hindsight review may cause a utility to switch from an innovative technology to a more costly conventional one, and may cause underinvestment. Profit-sharing schemes, properly designed, can promote efficient levels of investment in innovative technologies. Copyright 1995 by Kluwer Academic Publishers

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (8)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Regulatory Hindsight Review and Innovation by Electric Utilities (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:regeco:v:7:y:1995:i:3:p:233-54

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11149/PS2

Access Statistics for this article

Journal of Regulatory Economics is currently edited by Menaham Spiegel

More articles in Journal of Regulatory Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().