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Toward Improved and Practical Incentive Regulation

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  • Brown, Lorenzo
  • Einhorn, Michael
  • Vogelsang, Ingo

Abstract

The first half of this paper overviews traditional methods of rate-making--embedded and marginal cost pricing--and four recent alternatives--automatic rate adjustments, profit-sharing, tariff menus, and the Vogelsang-Finsinger convergence mechanism--that have come to challenge them. The authors develop a list of nine desirable properties that are suitable to gauge any regulatory mechanism. In the second half of the paper, they explore in greater detail two recent incentive plans--the FCC's price caps approach and a mechanism that the three authors proposed in a FERC document. Based on the nine properties, these two mechanisms are compared. Copyright 1991 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 3 (1991)
Issue (Month): 4 (December)
Pages: 323-38

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Handle: RePEc:kap:regeco:v:3:y:1991:i:4:p:323-38

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Web page: http://www.springerlink.com/link.asp?id=100298

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Cited by:
  1. Ingo Vogelsang, 2006. "Electricity Transmission Pricing and Performance-based Regulation," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 4), pages 97-126.
  2. Pfeifenberger, Johannes P & Tye, William B, 1995. "Handle with care : A primer on incentive regulation," Energy Policy, Elsevier, vol. 23(9), pages 769-779, September.
  3. Galal, Ahmed & Nauriyal, Bharat, 1995. "Regulating telecommunications in developing countries : outcomes, incentives, and commitment," Policy Research Working Paper Series 1520, The World Bank.

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