Explaining regulatory commission behavior in the electric utility industry
- Univ. of Georgia, Athens (United States)
- Weber State Univ., Ogden, UT (United States)
A number of theoretical studies have examined regulated output price and regulatory lag as policy tools of regulatory commissions. Bailey and Coleman argue that regulatory lag mitigates the Averch-Johnson effect. Wendel uses a game-theoretic model to show that regulators' and firms' strategies determine R and D expenditures and regulatory lag. Bailey argues that firms engage in R and D to earn excess profits because of regulatory lag, which is set by regulators. Assuming cost plus regulation, Sweeney argues that increased regulatory lag can retard adoption of new technologies; Sappington presents a similar argument-increasing lag induces waste. Bawa and Sibley assume that regulators directly adjust price to affect rates of return and that regulatory lag is endogenously determined as a function of the difference between the actual and fair rate of return.
- OSTI ID:
- 6989513
- Journal Information:
- Southern Economic Journal; (United States), Journal Name: Southern Economic Journal; (United States) Vol. 60:3; ISSN SECJAR; ISSN 0038-4038
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
290200 -- Energy Planning & Policy-- Economics & Sociology
296000* -- Energy Planning & Policy-- Electric Power
ADMINISTRATIVE PROCEDURES
DECISIONS AND ORDERS
ELECTRIC UTILITIES
ENFORCEMENT
GOVERNMENT POLICIES
PRICING REGULATIONS
PROFITS
PUBLIC UTILITIES
REGULATIONS