Rent Extraction and Incentives for Efficiency in Recent Regulatory Proposals
AbstractBuilding on a simple model proposed by Schmalensee (1989), this paper uses simulation techniques to analyze and compare various regulatory schemes including Schmalensee's family of (linear) "good" regulatory regimes, a price-cap regime allowing for downward price flexibility, and a regime that combines price-cap and profit sharing. The quantitative analysis pays particular attention to measuring the trade-off between rent extraction and incentives for efficiency. The main findings of this study can be summarized as follows: First, it appears that pure price-cap regulation leaves substantial rent to the firm relative to the other regimes. Second, introducing room for downward price flexibility improves efficiency of price-cap over Schmalensee's linear regulatory regimes. Finally, by correcting in part for the distributional distortion of price-cap, the profit-sharing mechanism often yields levels of welfare comparable to optimal regulation levels. Copyright 1994 by Kluwer Academic Publishers
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 6 (1994)
Issue (Month): 2 (May)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100298
Other versions of this item:
- Gasmi, Farid & Ivaldi, Marc & Laffont, Jean-Jacques, 1992. "Rent Extraction and Incentives for Efficiency in Recent Regulatory Proposals," IDEI Working Papers 21, Institut d'Économie Industrielle (IDEI), Toulouse.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Weisman, Dennis L., 2002. "Is there 'Hope' for price cap regulation?," Information Economics and Policy, Elsevier, vol. 14(3), pages 349-370, September.
- Jean-Jacques Laffont, 2000. "Information et économie publique," Économie et Prévision, Programme National Persée, vol. 145(4), pages 107-115.
- Philippe Gagnepain, 2001. "La nouvelle théorie de la régulation des monopoles naturels : fondements et tests," Post-Print hal-00622947, HAL.
- Bousquet, Alain & Ivaldi, Marc, 1997. "Optimal pricing of telephone usage: An econometric implementation," Information Economics and Policy, Elsevier, vol. 9(3), pages 219-239, September.
- Francesca Stroffolini, 2009. "Access Profit-Sharing Regulation with Information Transmission and Acquisition," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 214, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- David Hawdon & Lester C. Hunt & Paul Levine & Neil Rickman, 2005.
"Optimal sliding scale regulation: An application to regional electricity distribution in England and Wales,"
Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS), Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey
111, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
- David Hawdon & Lester C. Hunt & Paul Levine & Neil Rickman, 2007. "Optimal sliding scale regulation: an application to regional electricity distribution in England and Wales," Oxford Economic Papers, Oxford University Press, vol. 59(3), pages 458-485, July.
- Hawdon, David & Hunt, Lester & Levine, Paul L & Rickman, Neil, 2005. "Optimal Sliding Scale Regulation: An Application to Regional Electricity Distribution in England and Wales," CEPR Discussion Papers 4934, C.E.P.R. Discussion Papers.
- Laffont, Jean-Jacques, 1993. "Nouvelles formes de rÃ©glementation," L'ActualitÃ© Economique, SociÃ©tÃ© Canadienne de Science Economique, SociÃ©tÃ© Canadienne de Science Economique, vol. 69(2), pages 3-15, juin.
- Jose Luis Lima R & Andres Gomez Lobo, 2004. "Good Regulatory Lags for Price Cap and Rolling Cap contracts," Econometric Society 2004 Latin American Meetings, Econometric Society 278, Econometric Society.
- Iossa, Elisabetta & Stroffolini, Francesca, 2005. "Price cap regulation, revenue sharing and information acquisition," Information Economics and Policy, Elsevier, vol. 17(2), pages 217-230, March.
- Harvey James & Derek Johnson, 2002. "Understanding Regulatory Environments and their Impact on Economic Change," Industrial Organization, EconWPA 0202001, EconWPA.
- Iossa, Elisabetta & Stroffolini, Francesca, 2002. "Price cap regulation and information acquisition," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 20(7), pages 1013-1036, September.
- Dalen, Dag Morten & Gomez-Lobo, Andres, 1997. "Estimating cost functions in regulated industries characterized by asymmetric information," European Economic Review, Elsevier, vol. 41(3-5), pages 935-942, April.
- Lise Rochaix, 1997. "Asymétries d'information et incertitude en santé : les apports de la théorie des contrats," Économie et Prévision, Programme National Persée, vol. 129(3), pages 11-24.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.