Strategic Behaviour under Regulatory Benchmarking

Tooraj Jamasb*, Paul Nillesen, Michael Pollitt

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

In order to improve the efficiency of electricity distribution networks, some regulators have adopted incentive regulation schemes that rely on performance benchmarking. Although regulation benchmarking can influence the “regulation game,” the subject has received limited attention. This paper discusses how strategic behaviour can result in inefficient behaviour by firms. We then use the Data Envelopment Analysis (DEA) method with US utility data to examine implications of illustrative cases of strategic behaviour reported by regulators. The results show that gaming can have significant effects on the measured performance and profitability of firms.
Original languageEnglish
JournalEnergy Economics
Volume26
Issue number5
Pages (from-to)825-843
Number of pages19
ISSN0140-9883
DOIs
Publication statusPublished - 2004
Externally publishedYes

Keywords

  • Gaming
  • Strategic behaviour
  • Regulation
  • Benchmarking
  • Electricity

Cite this