Regulating by "capping" Prices
Author | : Timothy J. Brennan |
Publisher | : |
Total Pages | : 31 |
Release | : 1988 |
Genre | : Cost |
ISBN | : |
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Author | : Timothy J. Brennan |
Publisher | : |
Total Pages | : 31 |
Release | : 1988 |
Genre | : Cost |
ISBN | : |
Author | : D. Bös |
Publisher | : Elsevier |
Total Pages | : 472 |
Release | : 2015-12-04 |
Genre | : Business & Economics |
ISBN | : 0080514707 |
This clear, precisely written text presents an important branch of the modern, micro-economically based theory of industrial organization and of public finance, utilizing calculus only. Answers are provided to some pertinent economic questions, such as the pricing policies of vote-seeking politicians, of empire-building bureaucrats and of out-put-maximizing and energy-saving public utilities. These policies are compared with the welfare economic benchmark rules e.g. on marginal cost pricing and Ramsey pricing. Great significance is attached to price regulation. The book elucidates the recent replacement of rate of return regulation by price-cap regulation. It also explains why many simple rules like yardstick regulation fail to achieve optimal prices, which shows how complicated it is to induce managers to truthfully reveal their private information. How this can be achieved properly is shown in various principal-agent models on regulation with uncertain costs, uncertain demand and with soft budget constraints.
Author | : Simon Cowan |
Publisher | : |
Total Pages | : 434 |
Release | : 1995 |
Genre | : Price regulation |
ISBN | : |
Author | : Christopher Coyne |
Publisher | : London Publishing Partnership |
Total Pages | : 227 |
Release | : 2015-03-27 |
Genre | : Business & Economics |
ISBN | : 0255367023 |
Price controls across many sectors are currently being hotly debated. New controls in the housing market, more onerous minimum wages, minimum prices for alcohol, and freezes on energy prices are very high up the agenda of most politicians at the moment. Even without any further controls, wages, university fees, railway fares and many financial products already have their prices at least partly determined by politicians rather than by supply and demand in the market. Indeed, barely a sector of the UK economy is unaffected in one way or another by government controls on prices. This book demonstrates why economists do not like price controls and shows why they are widely regarded as being amongst the most damaging political interventions in markets. The authors analyse, in a very readable fashion, the damage they cause. Crucially, the authors also explain why, despite universal criticism from economists, price controls are so popular amongst politicians.
Author | : Omar A Nayeem |
Publisher | : |
Total Pages | : 0 |
Release | : 2017 |
Genre | : |
ISBN | : |
We study price-cap regulation in a market in which a vertically integrated upstream monopolist sells an essential input to a downstream competitor. In the absence of regulation, entry benefits both firms, but may be detrimental to downstream consumers because the upstream monopolist can set a high input price that will push downstream prices above the monopoly level. However, if a regulator caps the incumbent's upstream and downstream prices, consumers and firms benefit from entry. Using a dynamic extension of the model, we explore the concern that price caps may induce incumbents to forgo cost-reducing investments and dampen entrants' incentives to self-provision the input.
Author | : David Edward Michael Sappington |
Publisher | : World Bank Publications |
Total Pages | : 52 |
Release | : 1994 |
Genre | : Administracion publica |
ISBN | : |
Differences in the form, function, and scope of regulatory policies are traced to differences in social institutions, in the characteristics of the industries being regulated, and in the regulators' objectives and resources.
Author | : Michael A. Crew |
Publisher | : Springer Science & Business Media |
Total Pages | : 213 |
Release | : 2012-12-06 |
Genre | : Business & Economics |
ISBN | : 146156249X |
This volume focuses on incentive regulation and competition. While much of the regulatory action is taking place in telecommunications, the impact of competition and the resultant regulatory change is being felt in other traditional public utilities including electricity. The book reviews topics including price caps, incentive regulation, market structure and new regulatory technologies.
Author | : Catherine Liston |
Publisher | : |
Total Pages | : |
Release | : 1993 |
Genre | : |
ISBN | : |
Author | : Jeffrey H. Rohlfs |
Publisher | : |
Total Pages | : |
Release | : 2012 |
Genre | : |
ISBN | : |
Price cap regulation uses a formula, set in advance, to determine the price increases for a firm's services for a period of several years. During this period, the firm may keep all the benefits of its incremental productivity gains. Customers can also benefit because the price cap formula may cause prices to rise less rapidly during the period. The sharpened incentives created may encourage the firm to offer innovative new services. After the period ends, regulators may order price reductions that reflect productivity gains during the period. This Note presents the advantages of using price cap over rate-of-return (ROR) in regulating telecommunications carriers. It reviews the U.S. experience with price caps, focusing primarily on federal regulation. It then briefly discusses the lessons of this experience for developing countries.
Author | : Michael A. Einhorn |
Publisher | : Springer Science & Business Media |
Total Pages | : 247 |
Release | : 2012-12-06 |
Genre | : Business & Economics |
ISBN | : 1461539765 |
Michael A. Einhorn In continuing to deregulate telecommunications companies, regulators have begun to consider alternative approaches to traditional cost-based price regulation as a means of encouraging monopoly efficiency, promulgating technological innova tion, protecting consumers, and reducing administrative costs. Under cost-based regulatory procedures that had been used, prices were designed to recover the regulated company's costs plus an allowed rate of return on its rate base; this strategy was costly to administer, provided no consistent incentives to cost-ef ficiency and technological improvement, afforded many opportunities for strategic misrepresentation of reported costs, and may have encouraged both uneconomic expansion of the utility's rate base and cross-subsidization of its competitive services. A category of alternative regulatory approaches can be classified broadly as social contracts. Under the general strategy of social contract regulation, regulators first delimit a group of regulated core services that they continue to regulate and then stipulate a list of constraints that the utility must agree to meet in the future; in exchange, regulators agree to detariff or deregulate entirely other competitive or nonessential services that the utility may offer. As long as no stipulated constraints are violated, the utility may price freely any service; if it reduces costs, it may keep a share of its profits. According to the National Telecommunications Information Administration (NTIA, 1987), social contract agreements of one form or another have been considered or implemented in a majority of American states.