The Optimal Level Of Investment In The Rate Of Return Regulation To Achieve The Conditions

Network utilities are characterized by natural monopoly. It is an important issue for private utilities on which conditions adequate investment on the utilities will be supplied efficiently. In this article, we consider it as the standard of adequateness that the high demand can be met by the assets. However, if regulator cannot keep his credible commitment about rate of return of the assets, the utility will refuse to invest. Thus, the key problem is that what commitment matters. At the same time, the commitment is determined by some remarkable features of regulation regimes. We will give a reasonable explanation about this topic and research the situation in _ China.