that the eight-year catch-up period allowed in this regulation gives strong incentives to reduce costs since the firms can …Data Envelopment Analysis (DEA) based cost norms have attractive properties in the regulation of natural monopolies … to suboptimal incentives. When a regulated firm compares the marginal change in its cost norm with its marginal cost of …

implications are higher the more heterogeneous the sector is. As an example, we use the Danish benchmarking regulation of the waste …

problem. The regulator has, therefore, initiated an extensive effort to try to incorporate supply quality in the regulation … gives the companies incentives to reveal private information about their true trade-offs. This can help the regulator …

other factors, such as the political agenda and the historical context of the regulation. This sometimes results in some … regulation of the Danish water sector. More specifically, we look at the characteristics of the method the regulator uses to take …

investigate the incentives of a DEA based regulation when some of the demand dimensions, the cost drivers, can, in fact, be … controlled by the monopoly. In such cases, the classical DEA based regulation may lead to suboptimal incentives. Specifically, we … used to regulate Danish water firms. We show that the catch-up period allowed in this regulation gives strong incentives to …