Issues in tariff pricing: future directions for regulation of India's infrastructure sectors
Publication Year: 1999
Author(s): Rajendra K Pachauri
The process of setting tariffs and their regulation is governed by a number of consideration, which can be established on the basis of experience in various countries. Price have to be determined on a forward-looking and dynamic basis, and they have to fulfill objectives of efficiency and equity. Prices must be such that they promote innovation and competition, and ultimately lead to the welfare of the consumer, as was the case in the UK. And, to ensure efficiency of natural resource use through pricing and the signals that it provides, environmental effects and other externalities need to be internalized. Regulators in India have several options in adopting the principles that apply to tariff setting, and some of these are explored later in this paper
Source: Transition to a liberalized environment: experiences and issues in regulation: 54-62p.