Can we measure Welfare? Dynamic Comparisons of Allocative Efficiency before and after the Introduction of Quality Regulation for Norwegian Electricity Distributors.

Anton Burger, Philipp von Geymüller

Publication: Working/Discussion PaperWU Working Paper

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Abstract

We investigate empirically the usefulness of price-cap and quality regulation in terms of allocative efficiency and welfare. An analytical framework allows us to determine sufficient conditions for an increase in welfare. We propose Malmquist productivity indices and their decomposition to check the conditions and to see whether it was a better-solved trade off between quality and costs that caused the welfare increase. The application of this method to a representative sample of Norwegian distribution system operators yields strong evidence for a positive effect of quality regulation on welfare. (author's abstract)

Publication series

SeriesWorking Papers / Research Institute for Regulatory Economics
Number2008,4

WU Working Paper Series

  • Working Papers / Research Institute for Regulatory Economics

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