What is the X-Factor in the German Electricity Industry?
A new legislation in the German electricity market requires the implementation of an incentive-based regulation within the next years. In such a regime either prices or revenuesare capped and grow with the inflation rate minus a factor, which accounts for productivitydifferences between the sector and the rest of the economy. This paper derivessuch an X-factor for the German electricity industry using a new productivity databaseand Growth Accounting methodology. Considering that several underlying assumptionsare violated due to market imperfections, the calculated X-factor rises from 0.48 to amodified value of 2.15.
|Date of creation:||2006|
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