• Corpus ID: 17169566

Price Caps and Rate of Return Regulation *

  title={Price Caps and Rate of Return Regulation *},
  author={Henry Ergas and John Small},
This paper considers the difference between two types of regulation as they affect the regulated firm. Using the electricity distribution industry in Victoria as a case study, we discuss the impact of the periodic resetting of regime parameters which is a standard feature of price cap regimes. We explain why such resets are necessary and how the resulting incentives differ from those generated by rate of return regulation. 

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