The two forms of natural monopoly regulation that are typically discussed in intermediate microeconomics textbooks are marginal cost pricing and average cost pricing (rate-of-return regulation). However, within the last 20 years, price-cap regulation has largely replaced rate-of-return...

A system of Tradable Green Certificates (TGCs) is a market-based subsidy scheme designed to promote electricity generation from renewable energy sources such as wind power. Under a TGC system, the principal policy instrument is the “percentage requirement,” which stipulates the percentage of...

Price cap regulation is often combined with service quality regulation since price caps may create incentives for quality degradation. A service quality adjustment factor (the Q-Factor) in the price cap formula ensures that allowed prices fall as quality declines. This paper discusses some...