Determinants of the Requested Rate of Return and the Rate of Return Granted in a Formal Regulatory Process
Volume: Volume 9, No. 2
Issue: Autumn 1978
Pages: pp. 611-621
Authors: R. Blaine Roberts, G.S. Maddala, and Gregory Enholm
Title: Determinants of the Requested Rate of Return and the Rate of Return Granted in a Formal Regulatory Process
Abstract: This paper contains further analysis of the questions discussed in two papers by Joskow concerning what rate of return a regulated firm will request and what rate of return it will be granted in a formal regulatory process. Using Florida data, this paper extends Joskow's approach by examining both the selectivity and the simultaneity of the rate of return requested and the rate of return granted. Both a "probit two-stage least squares" and a "tobit two-stage least squares" model are estimated and the results differ significantly from the OLS estimates.
JEL Classification
Regulation of Public Utilities (6130)
Economics of Regulation (6190)
Industry Studies Electrical, Gas, Communication, and Information Services (6352)