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The Revealed Preference of Regulatory Menus: Evidence from the Pre-Nationalisation British Gas Industry

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  • Terry Robinson

Abstract

Prior to nationalisation British gas undertakings were faced with a choice of three different regulatory schemes linking the price charged for gas with the amount of dividend that could be paid. The three schemes, the maximum price system, the sliding scale and the basic price system possessed varying incentive properties. This paper investigates, empirically, the characteristics of firms under each regime. The multinomial logit results suggest that larger firms with lower unit costs were more likely to opt for regulatory options with more powerful incentive mechanisms.

Suggested Citation

  • Terry Robinson, 2006. "The Revealed Preference of Regulatory Menus: Evidence from the Pre-Nationalisation British Gas Industry," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(2), pages 213-221.
    • Handle: RePEc:taf:irapec:v:20:y:2006:i:2:p:213-221
    DOI: 10.1080/02692170600581128
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    References listed on IDEAS

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    1. Tracy R. Lewis & David E.M. Sappington, 1989. "Regulatory Options and Price-Cap Regulation," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 405-416, Autumn.
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