Revenue Sharing

A form of hybrid regulation. With this mechanism, the regulator allows the operator to keep some portion of the revenues it receives (beyond a pre-specified point) from selling the product or service and requires the operator to give the rest to customers, through price reductions, refunds, or increased investment in facilities or services. See Revenue Cap. In taxation, the term applies to the transfer of tax revenue from one unit of government, such as the federal government, to other units, such as state or municipal governments.