We examine regulation as a repeated game between a regulator and a utility facing a Markovian sequence of demands. Sunk … equilibria, but these policies must under-reward capital in some states of the world. Carefully designed nonlinear price … regulation can improve on these equilibrium outcomes, although at higher consumer costs, and only if state-contingent transfers …

and gas. The Paper argues that there is unfinished business in the areas of regulation, restructuring, encouraging proper … risk management through contracting, and designing markets and regulation to ensure effective and sustainable competition …