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Multi-Period Dea Incentive Regulation in Electricity Distribution

Author

Listed:
  • Per J. Agrell
  • Peter Bogetoft

    (The Royal Veterinary and Agricultural University, Denmark)

  • Jørgen Tind

Abstract

Multi-period multi-product regulatory schemes for electricity distributors are presented, based on cost information from a productivity analysis model and an agency theoretical decision model. The proposed schemes are operational and demonstrate considerable advantages compared to the popular CPI-X revenue cap regulation. The schemes avoid arbitrariness, too high or negative informational rents as well as ratchet effects and they promote rapid productivity catch-up by making full use of available data. More generally, the paper contributes to the theoretical unification between firm-based Data Envelopment Analysis (DEA) productivity models and micro-economic reimbursement theories.

Suggested Citation

  • Per J. Agrell & Peter Bogetoft & Jørgen Tind, 2000. "Multi-Period Dea Incentive Regulation in Electricity Distribution," CIE Discussion Papers 2000-13, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:2000-13
    as

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    File URL: http://www.econ.ku.dk/cie/dp/dp_2000-2002/2000-13.pdf/
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    References listed on IDEAS

    as
    1. Xavier Freixas & Roger Guesnerie & Jean Tirole, 1985. "Planning under Incomplete Information and the Ratchet Effect," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 173-191.
    2. Bishop, Matthew & Kay, John & Mayer, Colin (ed.), 1995. "The Regulatory Challenge," OUP Catalogue, Oxford University Press, number 9780198773429.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Antonio Estache & Sergio Perelman & Lourdes Trujillo, 2006. "Infrastructure Reform in Developing Economies: Evidence from a survey of efficiency measures," ULB Institutional Repository 2013/44062, ULB -- Universite Libre de Bruxelles.
    2. Padilla-Hernández, Salvador & Venegas-Martínez, Francisco & Gómez-Monge, Rodrigo (ed.), 2011. "Avances recientes en teoría y práctica económica," Sección de Estudios de Posgrado e Investigación de la Escuela Superios de Economía del Instituto Politécnico Nacional, Escuela Superior de Economía, Instituto Politécnico Nacional, edition 1, volume 2, number 006, January.
    3. Xie, Li & Kong, Chun, 2024. "Electricity user connection pricing strategy: The incomplete contract theory perspective," Energy Economics, Elsevier, vol. 132(C).
    4. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge.
    5. Tim Coelli & Denis Lawrence (ed.), 2006. "Performance Measurement and Regulation of Network Utilities," Books, Edward Elgar Publishing, number 3801.
    6. Munksgaard, Jesper & Pade, Lise-Lotte & Fristrup, Peter, 2005. "Efficiency gains in Danish district heating. Is there anything to learn from benchmarking?," Energy Policy, Elsevier, vol. 33(15), pages 1986-1997, October.

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    More about this item

    Keywords

    Regulation; Efficiency analysis; Incentive systems;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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