Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/40663 
Year of Publication: 
2008
Series/Report no.: 
Nota di Lavoro No. 2008,34
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
Abstract: 
The determinants of incentive regulation are a key issue in industrial policy. I study an asymmetric information model of incentive rules selection by a political principal endowed with an information-gathering technology whose efficiency increases with the effort exerted by two accountable supervisors (a regulator and a judge). This set up captures the institutions of several international markets. The model predicts that reforms toward higher powered rules are more likely the more inefficient (efficient) is the production (information-gathering) technology, the less tight is political competition and the greater are pro-consumer supervisors' incentives. This prediction is consistent with evidence based on US electric power market data.
Subjects: 
Incentive Schemes
Accountability Rules
Regulatory Capture
JEL: 
D73
H11
L51
K2
Document Type: 
Working Paper

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