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 …

The determinants of incentive regulation are a key issue in industrial policy. I study an asymmetric information model … greater are pro-consumer supervisors' incentives. This prediction is consistent with evidence based on US electric power …