Prices vs. Quantities and Delegating Price Authority to a Monopolist
AbstractThis paper examines the desirability of allowing a monopolist to determine the market price. The author finds that none of the regulatory mechanisms previously discussed in the "price versus quantities" literature strictly dominates unregulated, monopoly price-setting. Furthermore, despite suggestions by others, price-setting by a regulated monopolist whose profits coincide with society's net benefits is not always the most desirable means of control. Quantity-setting by such a monopolist may instead be the preferred choice. Combining both into one incentive-compatible mechanism provides the best regulatory scheme and one in which the regulator need not be informed about costs. Copyright 1990 by The Review of Economic Studies Limited.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Economic Studies.
Volume (Year): 57 (1990)
Issue (Month): 3 (July)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527
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- Blair, Benjamin F. & Lewis, Tracy R. & Sappington, David E. M., 1995. "Simple regulatory policies in the presence of demand and cost uncertainty," Information Economics and Policy, Elsevier, vol. 7(1), pages 57-73, April.
- Ascari, Guido & Bertoletti, Paolo & Menegatti, Mario, 2005. "Taxing a monopolist," Research in Economics, Elsevier, vol. 59(4), pages 321-334, December.
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