| Practice area: | Competition & Antitrust | Multi-sector | Regulatory economics |
|---|---|
| Client: | LE Working Paper |
| Published: | June, 2004 |
| Keywords: | quantitative analysis |
This Working Paper examines the setting of the X-factor in price cap regulation. We show the US-style productivity-offset X relies on assumptions that are unlikely to hold empirically. We propose a more direct X, where X equals the forecast of TFP growth less the difference between industry input and consumer price growth.