Revenue cap regulation is often combined with systematic benchmarking to reveal the managerial inefficiencies when regulating natural monopolies. One example is the European energy sector, where benchmarking methods are based on actual cost data, which are influenced by managerial inefficiency as well as operational heterogeneity. This paper demonstrates how a conditional nonparametric method, ...

We investigate the determinants of the efficiency of firms with a focus on the role of corruption. We construct a simple theoretical model where corruption increases factor requirements of firms because it diverts managerial effort away from factor coordination. We then exploit a unique dataset comprising firm-level information on 80 electricity distribution firms from 13 Latin American countri...

The evidence of volatility-price dependence observed in previous works (Karakatsani and Bunn 2004; Bottazzi, Sapio and Secchi 2005; Simonsen 2005) suggests that there is more to volatility than simply spikes. Volatility is found to be positively correlated with the lagged price level in settings where market power is likely to be particularly strong (UK on-peak sessions, the CalPX). Negative co...

Legal challenges and transitions of political power cause the future of regulatory policies to be uncertain. In this article, I investigate how uncertainty about environmental policy a‚ects investment and emissions at coal-€red power plants. I exploit a legal challenge to the Clean Air Interstate Rule (CAIR) that created variation in the probability that individual plants would need to comply w...

This paper applies parametric and non-parametric and parametric tests to assess the efficiency of electricity distribution companies in Germany. We address traditional issues in electricity sector benchmarking, such as the role of scale effects and optimal utility size, as well as new evidence specific to the situation in Germany This paper applies parametric and non-parametric and parametric t...

We analyze the effects of an incentive based regulatory scheme with revenue caps on the investment behaviors and decisions of 109 electricity distribution companies operating in Germany in 2006-2012. We hypothesize that Germany’s implementation of incentive regulation in 2009 has a negative impact on total investment, and that firms increase their investments in the base year. We build a model ...

Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. The Smart Grid is a set of emerging technologies that will facilitate "real-time pricing" for electricity and increase price elasticity of demand. This paper simulates the e¤ects of this increased demand elasticity using counterfactual simulations in a ...

In the last two decades many major regulatory issues in Florida have been resolved by means of stipulated settlements between the utilities and interested parties, notably the Office of Public Counsel, instead of by the traditional method of hearings and litigation before the Public Services Commission. This paper investigates the extent, nature and effects of these stipulations in the electric...

Electricity restructuring o®ers the potential for more e±cient production and investment, but may create the opportunity for producers to exercise market power. Oligopolists may cause deadweight loss in wholesale electricity markets, even when demand is perfectly inelastic, by inducing cross̄rm production ine±ciencies. This study estimates the environmental implications of production ine±ciencie...

The electricity sector is the largest source of GHG emissions in the world, and reducing these emissions would often be costly. However, because electricity markets remain often only integrated at a shallow level (with different pricing regulations), many gains from deeper integration (adoption of marginal cost pricing everywhere) are yet to capture. This paper assesses the benefits of such dee...