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Comparative statics of a monopolistic firm facing price-cap and command-and-control environmental regulations

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  • Caputo, Michael R.

Abstract

An exhaustive comparative statics analysis of a model of a monopolistic firm facing price-cap regulation and a variety of commonly implemented command-and-control environmental regulations is carried out. The comparative statics are intrinsic to each of the models and thus form their basic, empirically testable properties. Several unanticipated results emerge from the analysis. In particular, it is shown that a subset of the intrinsic comparative statics are qualitatively invariant to all of the commonly employed command-and-control environmental regulations that a price-cap regulated profit-maximizing monopoly might face, while others are specific to the type of command-and-control environmental regulation in place.

Suggested Citation

  • Caputo, Michael R., 2014. "Comparative statics of a monopolistic firm facing price-cap and command-and-control environmental regulations," Energy Economics, Elsevier, vol. 46(C), pages 464-471.
    • Handle: RePEc:eee:eneeco:v:46:y:2014:i:c:p:464-471
    DOI: 10.1016/j.eneco.2014.05.013
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    References listed on IDEAS

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    1. Michael R. Caputo & Dmitriy Popov, 2014. "Comparative Statics Of A Monopolistic Firm Facing Rate-Of-Return And Command-And-Control Pollution Constraints," Bulletin of Economic Research, Wiley Blackwell, vol. 66(S1), pages 17-35, December.
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    Cited by:

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    More about this item

    Keywords

    Price-cap regulation; Command-and-control environmental regulations; Comparative statics; Testable implications;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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