Endogenous access pricing (ENAP) is an alternative to the traditional procedure of setting a fixed access price that reflects the regulator’s estimate of the supplier’s average cost of providing access. Under ENAP, the access price reflects the supplier’s actual average cost of providing...

We analyze the optimal design of gain sharing plans to promote energy conservation. We show how the optimal plan varies as industry conditions and the regulator’s information change. We demonstrate the importance of allowing the energy supplier a choice among plans, some of which offer the...

We examine the design of regulatory policy to induce electric utilities to deliver the surplus-maximizing level of energy efficiency services, <InlineEquation ID="IEq1"> <EquationSource Format="TEX">$$e^{*}$$</EquationSource> </InlineEquation>. The rebound effect (whereby increased energy efficiency stimulates the demand for energy) typically renders revenue decoupling insufficient...</equationsource></inlineequation>

We examine settings where input prices are negotiated by industry suppliers, rather than dictated by regulators. We find that the input buyer may agree to pay a high price for an input because the high price serves to reduce the intensity of retail price competition with the input seller. Full...

We show that the incentives of a vertically integrated supplier to “sabotage” the activities of downstream rivals can vary with both the type of sabotage and the nature of downstream competition. Cost-increasing sabotage is typically profitable under both Cournot and Bertrand competition. In...

This article reviews the major insights of the economics literature regarding the design of service quality regulation in public utility industries. The focus is on generic service quality issues of primary relevance in the industries, which include the electricity, telecommunications, and water...

We analyze the incentives of a vertically-integrated producer (VIP) to engage in “self-sabotage”.Self-sabotage occurs when a VIP intentionally increases its upstream costs and/or reduces the quality of its upstream product. We identify conditions under which self-sabotage is profitable for...

We examine the impact of incentive regulation—price regulation and earnings sharing regulation—on retail service quality in the U.S. telecommunications industry between 1991 and 2002. We find that incentive regulation is associated with significantly higher service quality on several...