Incentive Regulation, Investments and Technological Change

Ingo Vogelsang

No 2964, CESifo Working Paper Series from CESifo

Abstract: Based on an idiosyncratic reading of the literature I propose intermediate (rather than tight or soft) regulation for balancing investment incentives with allocative efficiency and competition objectives. Intermediate regulation is compatible with incentive regulation and helps lengthening the regulatory commitment period necessary for incentives. However, such commitment for the whole time horizon of infrastructure or innovation investments is impossible. The compatibility of incentive regulation and efficient investment is thus in doubt. Incentive regulation for regular infrastructure investments therefore needs periodic updating based on rate-of-return regulation criteria. Innovative infrastructure investments may warrant regulatory holidays, which should be conditioned on strict criteria.

JEL-codes: L50 L90 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (24)

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Chapter: Incentive Regulation, Investments and Technological Change (2012)
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