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Multi-Period Dea Incentive Regulation in Electricity Distribution

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Author Info
Per J. Agrell
Peter Bogetoft (The Royal Veterinary and Agricultural University, Denmark)
Jørgen Tind
Abstract

Multi-period multi-product regulatory schemes for electricity distributors are presented, based on cost information from a productivity analysis model and an agency theoretical decision model. The proposed schemes are operational and demonstrate considerable advantages compared to the popular CPI-X revenue cap regulation. The schemes avoid arbitrariness, too high or negative informational rents as well as ratchet effects and they promote rapid productivity catch-up by making full use of available data. More generally, the paper contributes to the theoretical unification between firm-based Data Envelopment Analysis (DEA) productivity models and micro-economic reimbursement theories.

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File URL: http://www.econ.ku.dk/CIE/Discussion%20Papers/2000/pdf/2000-13.pdf
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Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 2000-13.

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Length: 16 pages
Date of creation: Dec 2000
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Handle: RePEc:kud:kuieci:2000-13

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Related research
Keywords: Regulation; Efficiency analysis; Incentive systems;

Find related papers by JEL classification:
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Banker, Rajiv D., 1984. "Estimating most productive scale size using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 17(1), pages 35-44, July. [Downloadable!] (restricted)
  2. Bogetoft, Peter, 1995. "Incentives and productivity measurements," International Journal of Production Economics, Elsevier, vol. 39(1-2), pages 67-77, April. [Downloadable!] (restricted)
  3. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn. [Downloadable!] (restricted)
  4. Freixas, Xavier & Guesnerie, Roger & Tirole, Jean, 1985. "Planning under Incomplete Information and the Ratchet Effect," Review of Economic Studies, Blackwell Publishing, vol. 52(2), pages 173-91, April. [Downloadable!] (restricted)
  5. Banker, R. D. & Charnes, A. & Cooper, W. W. & Clarke, R., 1989. "Constrained game formulations and interpretations for data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 40(3), pages 299-308, June. [Downloadable!] (restricted)
  6. Oliver Hart & Bengt Holmstrom, 1986. "The Theory of Contracts," Working papers 418, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Kittelsen, S.A.C., 1993. "Stepwise DEA; Choosing Variables for Measuring Technical Efficiency in Norwegian Electricity Distribution," Memorandum 06/1993, Oslo University, Department of Economics.
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  1. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge. [Downloadable!]
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