Journal of Regulatory Economics

, Volume 42, Issue 2, pp 115–134

Designing optimal gain sharing plans to promote energy conservation

Authors

  • Leon Yang Chu
    • Department of Information and Operations Management, Marshall School of BusinessUniversity of Southern California
    • Department of Economics, Warrington College of BusinessUniversity of Florida
Original Article

DOI: 10.1007/s11149-012-9194-3

Cite this article as:
Chu, L.Y. & Sappington, D.E.M. J Regul Econ (2012) 42: 115. doi:10.1007/s11149-012-9194-3

Abstract

We analyze the optimal design of gain sharing plans to promote energy conservation. We show how the optimal plan varies as industry conditions and the regulator’s information change. We demonstrate the importance of allowing the energy supplier a choice among plans, some of which offer the prospect of both pronounced financial gains for superior performance and substantial losses for inferior performance.

Keywords

Energy conservationGain sharingAsymmetric information

JEL Classification

D82L51Q38

Copyright information

© Springer Science+Business Media, LLC 2012