Regulatory opportunism and investment behavior: Evidence from the US electric utility industry

• 成果类型: Article
• 署名作者: Lyon, TP; Mayo, JW
• 署名单位: University of Michigan System; University of Michigan; Georgetown University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• 发表日期: 2005
• 页码: 628-644
• 关键词: hindsight

摘要

Large sunk costs and incomplete regulatory contracts in public utilities create the Possibility of opportunistic behavior by either regulators or regulated firms. We present an empirical methodology for identifying opportunism within a regulated setting, and apply it to the large-scale cost disallowances levied by state regulators on electric utilities during the 1980s. Examining the investment propensity of all firms-both those that faced cost disallowances and those that did not-within particular regulatory jurisdictions, we find little evidence that cost disallowances were opportunistic. Instead, regulators appear to have been largely driven by the desire to punish specific poorly managed utilities.