2134/2740
Tom Weyman-Jones
Tom
Weyman-Jones
Efficiency and productivity analysis in regulation and governance
Loughborough University
2007
Regulation
Data envelopment analysis
Stochastic frontier analysis
Economics not elsewhere classified
2007-03-30 11:18:07
Preprint
https://repository.lboro.ac.uk/articles/preprint/Efficiency_and_productivity_analysis_in_regulation_and_governance/9492779
This paper surveys the application of efficiency and productivity analysis to
recent regulatory experience, especially in Europe. From a review of regulatory case
studies, particularly of network industries, it is clear that regulatory practice differs
from theoretical precedent in choice of methodology, sample size, model specification
and price or revenue control implementation. A principal-agent model of linear
regulatory contracts is used to understand this discrepancy, suggesting that efficiency
and productivity analysis has been used to capture economic rent rather than to
provide incentives for efficiency. Predictions of the model are used to investigate
other assumptions in efficiency and productivity analysis.