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Reexamination of the A-J effect


Author Info

  • Michael R. Caputo

    (University of California, Davis)

  • M. Hossein Partovi

    (California State University, Sacramento)


We establish four necessary and sufficient conditions for the existence of the Averch-Johnson effect in a generalized version of their famous model of the rate-of-return regulated firm. The four necessary and sufficient conditions are then compared to the two stronger sufficient conditions for the Averch-Johnson effect found in the literature. Our analysis also permits us to put to rest a somewhat protracted debate about the very existence of the Averch-Johnson effect.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 12 (2002)
Issue (Month): 10 ()
Pages: 1-9

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Handle: RePEc:ebl:ecbull:eb-02l20003

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  1. Takayama, Akira, 1969. "Behavior of the Firm under Regulatory Constraint," American Economic Review, American Economic Association, vol. 59(3), pages 255-60, June.
  2. El-Hodiri, Mohamed & Takayama, Akira, 1973. "Behavior of the Firm Under Regulatory Constraint: Clarifications," American Economic Review, American Economic Association, vol. 63(1), pages 235-37, March.
  3. Zajac, E. E., 1972. "Lagrange multiplier values at constrained optima," Journal of Economic Theory, Elsevier, vol. 4(2), pages 125-131, April.
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