Incentive regulation: expectations, surprises, and the road forward

Martin Cave

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Forty years have passed since an inflation-adjusted price cap, widely called RPI-X, was proposed as a way of controlling prices in the UK’s newly privatised monopoly telecommunications company by a form of incentive regulation. The paper traces developments since then in several jurisdictions, within the context of a wider field of changing regulatory governance involving legislatures and governments as well as regulatory agencies. The focus is on, first, the experience of increasing complexity of the incentive schemes adopted, and second on the growing political salience of regulatory decisions which adds goals such as net zero, with more direct quantitative targets, to maximising consumer welfare. The implications of these changes for regulatory interventions are considered.

Keywords: incentive regulation; network price caps; competition in networks (search for similar items in EconPapers)
JEL-codes: L51 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2024-09-01
New Economics Papers: this item is included in nep-com and nep-his
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Published in Review of Industrial Organization, 1, September, 2024, 65(2), pp. 431 - 453. ISSN: 0889-938X

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