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Prof. Gijsbert Zwart

Prof. Gijsbert Zwart
University of Groningen
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Associate Professor in the department of Economics, Econometrics and Finance at the University of Groningen.
His research focuses on applied theory of industrial organization, in particular the design of policy in markets with market power and adverse selection.
Recent work includes analysis of investment in regulated markets (combinations of regulation and real options theory), design of risk adjustment in markets for health insurance, and competitive strategy in media markets.

On the 14th of December 2020, he presented “Optimal regulation of energy network expansion when costs are stochastic“ . Keywords: Adverse Selection, Dynamic contracting, Real options, Investment timing, Principal-Agent model, Regulation.


We analyze optimal regulation of the gradual investments in energy networks necessary to accommodate the energy transition. We focus on a real option problem where costs of new network technology are stochastic and not observable to the regulator. We solve for the regulatory scheme that optimally balances timely investments with rent extraction in this dynamic agency context. We then apply this methodology to a situation in which investment can be either in traditional network technology, with observable costs, or using an innovative network technology for which there is asymmetric information on costs. The optimal choice trades off the potential benefits of cheaper expansion with the costs of overcoming information frictions.

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