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Two Theorems on a Justification of the Multiservice Regulated Company

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  • Irwin W. Sandberg

Abstract

This paper directs attention to limitations in linear cost-function models of a multiservice regulated firm. Such models may be used in attempts to determine a "subsidy-free" price structure. Assuming a wide variety of multifirm alternative market structures in which each firm is not necessarily regulated, the paper shows that a single regulated firm's providing all services is always more socially desirable. This is true in the sense that there is a vector of prices which satisfies the regulatory constraint and corresponds for each service to both a lower price and a target quantity of service consumed.

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  • Irwin W. Sandberg, 1975. "Two Theorems on a Justification of the Multiservice Regulated Company," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 346-356, Spring.
    • Handle: RePEc:rje:bellje:v:6:y:1975:i:spring:p:346-356
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