Choosing a regulatory regime

Abstract

Privately owned gas undertakings were subject to three different price regulation regimes during the inter-war years and were free to choose which regime applied to them. This paper investigates the determinants which caused undertakings to switch from one regime to another. Since the historical record gives us few clues about this, the plentiful statistical data is used in a probit analysis. The results suggest that larger, more efficient firms were more likely to switch regimes and that distribution costs were an important factor in the decision to switch.