Measuring the Welfare Gains from Optimal Incentive Regulation

• 成果类型: Article
• 署名作者: Abito, Jose Miguel
• 署名单位: University of Pennsylvania
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdz050
• 发表日期: 2020
• 页码: 2019-2048
• 关键词: panel-data; simple menus; cost; Robustness; MARKET; identification; specification; procurement; EFFICIENCY; CONTRACTS

摘要

I empirically measure the welfare gains from optimal incentive regulation in the context of electric utilities facing both emissions and rate of return regulation (RORR). I provide evidence that RORR induces lower fuel efficiency, leading to greater coal consumption and higher emissions abatement costs. Replacing RORR with the optimal mechanism of Laffont and Tirole (1986) yields annual welfare gains of $686 million or a 11% reduction in electricity prices. I construct a much simpler two-contract menu that can achieve more than 65% of these welfare gains.