IDEAS home Printed from https://ideas.repec.org/p/sur/seedps/111.html

Optimal sliding scale regulation: An application to regional electricity distribution in England and Wales

Author

Listed:
  • David Hawdon

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

  • Lester C Hunt

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

  • Paul Levine

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

  • Neil Rickman

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

Abstract

This paper examines optimal price (i.e. ‘sliding scale’) regulation of a monopoly when productivity and managerial effort are not observed. We show how to operationalise this model of incentive regulation and use actual data from electricity distribution in England and Wales to make welfare comparisons of sliding scale regulation with a stylised price cap regime and the First-Best (the full information case). Our method enables us to quantify technical uncertainty as faced by the electricity regulator in the 1990s and shows that there are significant welfare gains from a sliding scale relative to the stylised price cap regime.

Suggested Citation

  • David Hawdon & Lester C Hunt & Paul Levine & Neil Rickman, 2005. "Optimal sliding scale regulation: An application to regional electricity distribution in England and Wales," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 111, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    • Handle: RePEc:sur:seedps:111
    as

    Download full text from publisher

    File URL: https://repec.som.surrey.ac.uk/seeds/SEEDS111.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Ovaere, Marten, 2023. "Cost-efficiency and quality regulation of energy network utilities," Energy Economics, Elsevier, vol. 120(C).
    3. Stroffolini, Francesca, 2012. "Access profit-sharing regulation with information acquisition and transmission," Research in Economics, Elsevier, vol. 66(2), pages 161-174.
    4. Miraldo, Marisa & Siciliani, Luigi & Street, Andrew, 2011. "Price adjustment in the hospital sector," Journal of Health Economics, Elsevier, vol. 30(1), pages 112-125, January.
    5. Francesca Stroffolini, 2009. "Access Profit-Sharing Regulation with Information Transmission and Acquisition," CSEF Working Papers 214, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. J.A. den Hertog, 2010. "Review of economic theories of regulation," Working Papers 10-18, Utrecht School of Economics.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sur:seedps:111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mona Chitnis (email available below). General contact details of provider: https://edirc.repec.org/data/eesuruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.