Regulatory Instruments and Their Effects on Investment Behavior
Regulatory instruments have long been understood to have a powerful effect on investment, and part of the motivation for introducing higher-powered regulatory regimes and contracts was to reduce incentives for inefficiency and over-investment (gold...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/04/4129257/regulatory-instruments-effects-investment-behavior http://hdl.handle.net/10986/14108 |
| Summary: | Regulatory instruments have long been
understood to have a powerful effect on investment, and part
of the motivation for introducing higher-powered regulatory
regimes and contracts was to reduce incentives for
inefficiency and over-investment (gold plating) inherent in
cost-plus regulatory schemes. In practice, the mix of
incentives and the institutional framework that make up a
higher-powered regulatory regime can also lead to unintended
distortions on investment behavior. The authors examine the
key drivers of investment behavior and provide some examples
of how these drivers have affected investment in practice.
They conclude with a set of key areas and interrelationships
that are at the core of a regulatory settlement, and
therefore need to be designed appropriately to drive
efficient investment behavior. |
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