IDEAS home Printed from https://ideas.repec.org/a/sen/journl/v9i3y2008p229-247.html
   My bibliography  Save this article

Setting the Regulatory Allowed Rate of Return Using Simulation and Loss Functions -The Case for Standardising Procedures

Author

Listed:
  • I.M. Dobbs

Abstract

The level set for the allowed rate of return for a regulated firm is a critical input in many regulatory determinations. Regulators typically recognise that the welfare losses that might arise from errors in estimation of the allowed rate of return may not be symmetric, and have often tried to account for this by selecting 'conservative' values for some of the key input variables. This paper discusses the drawbacks of these essentially ad hoc procedures, and proposes a more systematic approach to the determination of the allowed rate of return, based on simulation and welfare loss functions. Such an approach could help promote greater consistency in making such determinations across the regulated sector.

Suggested Citation

  • I.M. Dobbs, 2008. "Setting the Regulatory Allowed Rate of Return Using Simulation and Loss Functions -The Case for Standardising Procedures," Competition and Regulation in Network Industries, Intersentia, vol. 9(3), pages 229-247, September.
    • Handle: RePEc:sen:journl:v:9:i:3:y:2008:p:229-247
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    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:sen:journl:v:9:i:3:y:2008:p:229-247. 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: Petra Van den Bempt (email available below). General contact details of provider: http://www.crninet.com/ .

    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.