Note on "Gold Plating" or "Rate Base Padding"
Volume: Volume 3, No. 1
Issue: Spring 1972
Pages: pp. 311-315
Authors: Edward E. Zajac
Title: Note on "Gold Plating" or "Rate Base Padding"
Abstract: This note analyzes the ancient "gold plating" or "rate base padding" issue. It is shown that padding is profitable for the regulated firm only if it pursues certain expansion paths, and only if it has exhausted all positive-income-producing investment opportunities and must resort to negative-income-producing investments to bring down its rate of return to that allowed.