Cost benchmarking is a useful tool for regulating monopolistic companies. It is used by many regulatory agencies to establish a cost allowance, which is then used as a base parameter for price regulation. Cost benchmarking helps regulators set a fair price control for monopoly companies, while also incentivizing efficiency in the regulated sector.
In this case study, we analyze electricity distribution companies in Great Britain from 1991 to 2017 in terms of the evolution of their efficiency under an incentive-based regulatory regime.
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