We examine the effects of a systematic increase in the agents operating costs in a standard agency setting with moral hazard. We identify conditions under which the agent benefits from the increase in his costs. Perhaps more surprisingly, we show that the principal and he agent can both benefit...

We investigate when identical agents will be treated asymmetrically in a simple team setting. Asymmetric treatment is optimal when the agents individual contributions to team performance are complements. Symmetric treatment of identical agents is optimal when the agents contributions are...

We demonstrate the value of equal pay policies in teams, even when team members have distinct abilities and make different contributions to team performance. A commitment to compensate all team members in identical fashion eliminates the incentive that each team member otherwise has to sabotage...

This book applies new advances in economic theory regarding the asymmetry of information between firms and their regulators to the design of improved telecommunications regulation.

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>