This paper shows how the incentive to delay cost savings in a standard CPI-X pricing regime can be overcome by a carryover mechanism or by sharing the gains from such savings at the end of each year within a determination period. It also shows that simply fixing an ex-ante incentive rate will not overcome the incentive to delay.
What we do
Industries we regulate
Local Councils
Insurance Monitor
Working Paper - Incentives for cost-saving in CPI-X regimes - July 2011
Stay up to date. Subscribe to receive all major news and updates.