A non-Bayesian Piecewise Linear Approximation Adjustment Process for Incentive Regulation
Journal article, 2007

The chord-approximation adjustment process for incentive regulation of public utilities suggested by Vogelsang (1988) induces the regulated firm to engage in strategic behaviour instead of converging to marginal cost pricing. In this paper, we show how a non-Bayesian piecewise linear approximation of demand can eliminate this problem.

Regulatory mechanisms

Incentive regulation

Author

Björn Lantz

University of Gothenburg

Information Economics and Policy

0167-6245 (ISSN)

Vol. 19 1 95-101

Subject Categories

Economics and Business

DOI

10.1016/j.infoecopol.2006.09.001

More information

Created

10/10/2017