The Review of Economics and Statistics Vol. 84 No. 3 2002
Alternative Regulatory Methods and Firm Efficiency: Stochastic Frontier Evidence from the U.S. Electricity Industry
Abstract
The use of incentive regulation and other alternative regulatory programs in U.S. electricity markets has grown during the past two decades. Within a stochastic frontier framework, I investigate the effect of individual programs on the technical efficiency of a large set of coal and natural gas generation units. I find that those programs tied directly to generator performance and those that modify traditional fuel cost pass-through programs, to provide a greater incentive to reduce fuel costs, are associated with greater efficiency levels. Other programs have no statistical association with efficiency levels.
- DOI
- 10.1162/003465302320259529
- Volume
- 84
- Issue
- 3
- Pages
- 530-540
- Language
- en
- Sources
- openalex crossref