Competition and the Reform of Incentive Schemes in the Regulated Electricity Sector
Through applying performance based yardstick competition, regulator can obtain signals that have correlation with the transmission and distribution Enterprises cost style. Using these signals, regulator is able to improve the scheme of incentive regulation. In order to analyze the effect of the improved regulation scheme on incentive level, a model is built. We consider the regulation problem with complete contracting in a principal-agent model with adverse selection and review within this model the channel by which external competition parameters affect incentives within the regulated enterprise. The conclusion of the model shows that effect of improved scheme isnt always positive. If the correlation between signal and cost style is strong enough, the new scheme of regulation can increase the lever of incentive to enterprises; if not, may decrease. An intuitionistic example confirms this conclusion. So, when regulator wants to use signals to reform the scheme of regulation, she must ensure the strong correlation between signal and cost style rather than cause negative incentive.
Competition Electricity sector incentive Information structure Yardstick competition
Wang Xian-jia Zhang Xiao-hui Li Zhong-chi
Institute of Systems Engineering, Wuhan University Wuhan, P. R. China School of Economics and Management, Wuhan University Wuhan, P. R. China
国际会议
上海
英文
2007-09-21（万方平台首次上网日期，不代表论文的发表时间）