EconPapers    
Economics at your fingertips  
 

Incentive Price Regulation in Presence of Cost Heterogeneity: Some Considerations on the Basis of Price Regulation of the Water Service in Italy

Francesca Stroffolini

Rivista italiana degli economisti, 2014, issue 1, 3-44

Abstract: This work draws on the analysis of price regulation of water services in Italy, the so-called "Metodo Normalizzato", to examine the issues related to the definition of a regulatory mechanism when the costs of providing the service depend on exogenous variables which are geographically differentiated. The first part describes the "Metodo Normalizzato" and derives, on the basis of the model, the effects of its application in the case of perfect information of the regulator about the exogenous supply costs. The second part of the paper considers the case of asymmetry of information between the regulator and the service provider; its purpose is to identify the features that a regulatory mechanism, based on the "Price Cap", should meet to incentivize the minimization of operating costs to induce a tariff reduction, so to ensure tariff uniformity and service provision in each area.

Keywords: Asimmetry of Information; Price Cap; Profit-Sharing; Incentive Price Regulation. JEL classification: D82; D83; L5. (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
https://www.rivisteweb.it/download/article/10.1427/76113 (application/pdf)
https://www.rivisteweb.it/doi/10.1427/76113 (text/html)
Access to full text is restricted to subscribers

Related works:
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:mul:jqat1f:doi:10.1427/76113:y:2014:i:1:p:3-44

Access Statistics for this article

Rivista italiana degli economisti is currently edited by Giuliano Conti

More articles in Rivista italiana degli economisti from Società editrice il Mulino
Series data maintained by ().

 
Page updated 2018-03-25
Handle: RePEc:mul:jqat1f:doi:10.1427/76113:y:2014:i:1:p:3-44