Low-Powered vs High-Powered Incentives: Evidence From German Electricity Networks
2020
Abstract We propose a difference-in-differences approach to estimating the impact of incentives on cost reduction in the context of German electricity networks. When subject to a lower-powered regulation mechanism, relatively more efficient operators pile up more costs in the year used to determine future prices. This pattern is consistent with the idea that incentives matter: higher-powered incentives lead to cost reduction. The results are also consistent with an equilibrium where more efficient firms pool with less efficient ones under the threat of ratcheting.
- Correction
- Source
- Cite
- Save
- Machine Reading By IdeaReader
54
References
4
Citations
NaN
KQI