Abstract:The discussion begun in the February 15 issue pointed out some potential drawbacks to popular incentive drawbacks to popular incentive regulation (IR) plans, as they operate in practice. The principal...The discussion begun in the February 15 issue pointed out some potential drawbacks to popular incentive drawbacks to popular incentive regulation (IR) plans, as they operate in practice. The principal drawback is that the plans can create strong incentives for recontracting by well-intentioned regulators who face strong pressures to please their constituents. The likelihood of recontracting, in turn, can diminish the incentives for superior performance presented to the regulated firm. The question that remains is whether popular IR plans like price-cap regulation (PCR) can be modified to reduce the likelihood of recontracting, and thereby restore incentives for superior performance by the regulated firm. The answer is yes'.Read More
Publication Year: 1994
Publication Date: 1994-03-01
Language: en
Type: article
Access and Citation
Cited By Count: 2
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot