We compare the welfare effects of different regulation schemes of electricity distribution utilities. The compared regulation schemes are fixed price regulation, cost of service regulation, menu of cost-contingent contracts and simple menus of contracts. In our calculations we utilize the...

In this study we combine different possibilities to model firm level heterogeneity in Stochastic Frontier Analysis. We show that both observed and unobserved heterogeneity cause serious biases in inefficiency results if left unmodelled. Modelling observed and unobserved heterogeneity treats...