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.
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.
| Original language | English |
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| Publication status | Published - 1 Sept 2008 |