Designing optimal gain sharing plans to promote energy conservation
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- Chu, L.Y. & Sappington, D.E.M. J Regul Econ (2012) 42: 115. doi:10.1007/s11149-012-9194-3
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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.