The paper provides a tractable, analytical framework to study regulatory risk. Regulatory risk is captured by … funds. Results are as follows: 1) The regulator's reaction to regulatory risk depends on the curvature of aggregate demand …. 2) It yields a positive information rent effect exactly when demand is convex. 3) Firms benefit from regulatory risk …

The paper provides a tractable, analytical framework to study regulatory risk under optimal incentive regulation …. Regulatory risk is captured by uncertainty about the policy variables in the regulator's objective function: weights attached to … profits and costs of public funds. Results are as follows: 1) The regulator's reaction to regulatory risk depends on the …

This paper analyses simultaneous regulation of cost and quality when firms have private, correlated information about …

-of-return regulation is generally thought to result in overinvestment, while incentive regulation is believed to entail underinvestment …. Yet, previous empirical work has generally found that the introduction of incentive regulation has not systematically …-of-return regulation because investment decisions (what can be included in the rate base) are usually evaluated in a discretionary manner …

underlying state of the world (the basic propability of high downstream prices, or the type of the firm), optimal regulation uses …

terms of financial transmission rights. Our mechanism applies the incentive-regulation logic of rebalancing a two …

underlying state of the world (the basic probability of high downstream prices, or the type of the firm), optimal regulation uses …

This paper investigates political uncertainty as a source of regulatory risk. It shows that political parties have … incentives to reduce regulatory risk actively: Mutually beneficial pre-electoral agreements that reduce regulatory risk always … skewed. These results follow from a fluctuation effect of regulatory risk that hurts parties and an output-expansion effect …