Regulatory instruments and their effects on investment behavior
AbstractRegulatory instruments have long been understood to have a powerful effect on investment, and part of the motivation for introducing higher-powered regulatory regimes and contracts was to reduce incentives for inefficiency and over-investment (gold plating) inherent in cost-plus regulatory schemes. In practice, the mix of incentives and the institutional framework that make up a higher-powered regulatory regime can also lead to unintended distortions on investment behavior. The authors examine the key drivers of investment behavior and provide some examples of how these drivers have affected investment in practice. They conclude with a set of key areas and interrelationships that are at the core of a regulatory settlement, and therefore need to be designed appropriately to drive efficient investment behavior.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3292.
Date of creation: 01 Apr 2004
Date of revision:
Environmental Economics&Policies; International Terrorism&Counterterrorism; Business Environment; Economic Theory&Research; Decentralization; Economic Theory&Research; Environmental Economics&Policies; Business Environment; Business in Development; International Terrorism&Counterterrorism;
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- Burns, Phil & Riechmann, Christoph, 2004. "Regulatory instruments and investment behaviour," Utilities Policy, Elsevier, vol. 12(4), pages 211-219, December.
- Ian Alexander & Clive Harris, 2005. "The Regulation of Investment in Utilities: Concepts and Applications," World Bank Publications, The World Bank, number 7293, January.
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