Productivity throughout regulatory cycles in gas utilities

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This paper examines productivity patterns in price cap regulated utilities around price reviews. We specify a variable cost function that we estimate using alternative specifications of technical change. Results show that the pattern of pure technical change differs within and between regulatory cycles. They also provide evidence that exogenous investment reduces the ratchet-problem, that strategic cost cutting behavior is reduced when regulatory cycles are short and that, absent these two features, industry productivity is consistent with strategic cost cutting behavior.

Original languageEnglish
Pages (from-to)115-137
Number of pages23
JournalJournal of Regulatory Economics
Issue number2
StatePublished - Apr 2014
Externally publishedYes


  • Gas utilities
  • Incentive regulation
  • Productivity
  • Ratchet effect


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