Regulatory authorities in the European electricity sector use benchmarking techniques to determine the cost …-efficient production level for an incentive regulation of distribution system operators (DSOs). With nearly 900 DSOs operating in the … German electricity sector, of which 200 subject to incentive regulation, the issue of heterogeneity of DSOs has to be …

used to determine future prices when subject to a lower-powered regulation mechanism. The difference is particularly … significant (about 10% of total cost) for firms in the upper quartile of the efficiency distribution, a pattern which is …

subject to a lower-powered regulation mechanism. The difference is particularly significant (about 7%) for firms in the upper … quartile of the efficiency distribution, a pattern which is consistent with the pooling of types under the threat of ratcheting. …