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Lookup NU author(s): Brian Beavis, Professor Ian Dobbs
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The issue addressed in this paper is whether certain types of regulatory instruments perform better than others when the regulator's objective is simply to restrain the regulated firm's profitability. Price cap, profit cap, profit/sales and mark-up-on-average cost caps are considered as regulatory instruments, whilst expense preference, profits, and sales revenues are considered as potential arguments in the firm's objective function. The main finding is that, for the range of objective functions considered, the price cap leads to the best outcome from an economic welfare standpoint.
Author(s): Beavis B, Dobbs IM
Publication type: Article
Publication status: Published
Journal: Zeitschrift fur Nationalokonomie [Journal of Economics]
Year: 1994
Volume: 60
Issue: 3
Pages: 229-253
Print publication date: 01/01/1994
ISSN (print): 0931-8658
ISSN (electronic): 1617-7134
Publisher: Springer
URL: http://dx.doi.org/10.1007/BF01227481
DOI: 10.1007/BF01227481
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