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A contract design perspective on balancing the goals of utility regulation

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  • Eskesen, Anita

Abstract

Designing utility regulation involves trade-offs between different goals of contract design. Prioritising one objective may come at the cost of assigning a lower priority to another objective. This study compares four regulatory frameworks in terms of how they each prioritise different goals of contract design. While revenue-cap regulation can be said to minimise transaction costs, it also assigns a lower priority to coordination of production. Conversely, the frameworks that explicitly incorporate stakeholder engagement or negotiation prioritise coordination of production while assigning a lower priority to minimisation of transaction costs.

Suggested Citation

  • Eskesen, Anita, 2021. "A contract design perspective on balancing the goals of utility regulation," Utilities Policy, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:juipol:v:69:y:2021:i:c:s0957178720301521
    DOI: 10.1016/j.jup.2020.101161
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    Cited by:

    1. Bogetoft, Peter & Eskesen, Anita, 2022. "Balancing information rents and service differentiation in utility regulation," Energy Economics, Elsevier, vol. 106(C).
    2. Massarutto, Antonio & Roder, G. & Troiano, S., 2022. "Better safe than sorry? Stated preferences and the precautionary principle for securing drinking water quality in an Italian district," Utilities Policy, Elsevier, vol. 76(C).

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