Price Cap Regulation: A Case Study of Some Pitfalls of Implementation
AbstractThere has been considerable discussion of price-cap regulation as an alternative to traditional rate-of-return regulation. This paper examines some of the practical pitfalls of price-cap regulation. First, a model of a terminating price cap is developed. Next, this model is used to propose some problems of implementation. These problems are evaluated in the context of a case study of the Tucson Electric Power Company, which faced a type of price cap for several years in the 1980s. Extensions of the specific case to more general lessons about price-cap regulation are considered. Copyright 1991 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 3 (1991)
Issue (Month): 2 (June)
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Web page: http://www.springerlink.com/link.asp?id=100298
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Working Papers, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research
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