Methods and trends of performance benchmarking in UK utility regulation

Dassler, T, Parker, D and Saal, DS 2006, 'Methods and trends of performance benchmarking in UK utility regulation' , Utilities Policy, 14 (3) , pp. 166-174.

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Regulation is subject to information asymmetries that can lead to allocative and productive inefficiencies. One solution, suggested by Shleifer in 1985 and now adopted by many regulatory bodies round the world, is ‘benchmarking’, which is sometimes called ‘yardstick competition’. In this paper we consider Shleifer's original approach to benchmarking and contrast this with the actual use of benchmarking by UK regulatory bodies in telecommunications, water and the energy sector since the privatizations of the 1980s and early 1990s. We find that benchmarking plays only one part and sometimes a small part in the setting of regulatory price caps in the UK. We also find that in practice benchmarking has been subject to a number of difficulties, which mean that it is never likely to be more than one tool in the regulator's armoury. The UK's experience provides lessons for regulation internationally.

Item Type: Article
Themes: Subjects / Themes > K Law > K Law (General) > K3840 Regulation of industry, trade, and commerce. Occupational law > K3978 Public utilities
Subjects / Themes > H Social Sciences > HJ Public Finance
Subjects outside of the University Themes
Journal or Publication Title: Utilities Policy
Publisher: Elsevier
Refereed: Yes
ISSN: 0957-1787
Depositing User: H Kenna
Date Deposited: 16 Oct 2007 14:28
Last Modified: 27 Aug 2021 22:03

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