After a short description of the evolution of incentive regulation, this paper explores some of the issues that have arisen with its implementation in the electricity sector both in the UK and Italy. It illustrates the challenge facing a regulator in implementing an incentive mechanism under imperfect information, and focuses on some distortions emerging as a result of the design of the incentive scheme itself.
Solimene, L., Increasing complexity in electricity regulation: to whose benefit?, <<EUROPEAN REVIEW OF INDUSTRIAL ECONOMICS AND POLICY>>, 2011; 2011/2 (2): 1-23 [http://hdl.handle.net/10807/26022]
Increasing complexity in electricity regulation: to whose benefit?
Solimene, Laura
2011
Abstract
After a short description of the evolution of incentive regulation, this paper explores some of the issues that have arisen with its implementation in the electricity sector both in the UK and Italy. It illustrates the challenge facing a regulator in implementing an incentive mechanism under imperfect information, and focuses on some distortions emerging as a result of the design of the incentive scheme itself.
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