This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Strategic Pricing And Entry Deterrence Under Proce Cap Regulation

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Alberto Iozzi

Additional information is available for the following registered author(s):

Abstract

This paper shows that dynamic price cap regulation allows the regulated firm to deter entry. Under dynamic price cap regulation, the allowed prices in each period are an increasing function of the prices set in the previous period. By setting a low price before entry, the regulated firm can commit itself to charge a low price in the event of entry. If this price is sufficiently low with respect to the potential entrant's fixed cost, entry does not occur. Whether the regulated firm prefers to deter or accomodate entry depends on the level of the entry cost for the prospective entrant, on the tightness of the price cap and on the degree of market power of the competing firms in case of entry.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: ftp://160.80.46.20/RePEc/papers/130.zip
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Tor Vergata University, CEIS in its series Departmental Working Papers with number 130.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Dec 2000
Date of revision:
Handle: RePEc:rtv:ceiswp:130

Contact details of provider:
Postal: Via Columbia, 2 00133 Roma
Phone: 0039 06 2040234
Fax: 0039 06 2020687
Email:
Web page: http://www.ceistorvergata.it
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany. [Downloadable!]
  2. Ingo Vogelsang & Jorg Finsinger, 1979. "A Regulatory Adjustment Process for Optimal Pricing by Multiproduct Monopoly Firms," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 157-171, Spring. [Downloadable!] (restricted)
  3. Bradley, Ian & Price, Catherine, 1988. "The Economic Regulation of Private Industries by Price Constraints," Journal of Industrial Economics, Blackwell Publishing, vol. 37(1), pages 99-106, September. [Downloadable!] (restricted)
  4. Armstrong, M. & Vickers, J., 1992. "Price Discrimination, Competition and Regulation," Economics Series Working Papers 99140, University of Oxford, Department of Economics.
    Other versions:
  5. David Sappington, 1980. "Strategic Firm Behavior under a Dynamic Regulatory Adjustment Process," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 360-372, Spring. [Downloadable!] (restricted)
  6. Foreman, R. Dean, 1995. "Pricing incentives under price-cap regulation," Information Economics and Policy, Elsevier, vol. 7(4), pages 331-351, December. [Downloadable!] (restricted)
  7. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring. [Downloadable!] (restricted)
    Other versions:
  8. A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn. [Downloadable!] (restricted)
  9. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-83, June. [Downloadable!] (restricted)
  10. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March. [Downloadable!] (restricted)
    Other versions:
  11. Brennan, Timothy J, 1989. "Regulating by Capping Prices," Journal of Regulatory Economics, Springer, vol. 1(2), pages 133-47, June.
  12. David E.M. Sappington & David S. Sibley, 1992. "Strategic Nonlinear Pricing under Price-Cap Regulation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 1-19, Spring. [Downloadable!] (restricted)
  13. Iozzi, Alberto & Poritz, Jonathan A & Valentini, Edilio, 2002. " Social Preferences and Price Cap Regulation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 95-114. [Downloadable!] (restricted)
  14. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790.
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alberto Iozzi & Roberta Sestini & Edilio Valentini, 2005. "Pricing Discretion and Price Regulation in Competitive Industries," CEIS Research Paper 69, Tor Vergata University, CEIS. [Downloadable!]
    Other versions:
  2. Peter Lawrence & Arijit Mukherjee, 2002. "Price-Capping Regulation as a Protectionist Strategy in Developing Countries," Industrial Organization 0211009, EconWPA. [Downloadable!]
    Other versions:
  3. Paula Sarmento & António Brandão, 2007. "Entry Deterrence and Entry Accommodation Strategies of a Multiproduct Firm Regulated with Dynamic Price Cap," International Advances in Economic Research, Springer, vol. 13(1), pages 19-34, February. [Downloadable!] (restricted)
  4. Alberto Iozzi & Carla Pace & Roberta Sestini & Edilio Valentini, 2001. "On The Effects Of Regulating Price Discrimination By A Price Capped Firm," Departmental Working Papers 149, Tor Vergata University, CEIS. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS uses the data collected within the RePEc project, the largest online bibliographic database in Economics.

This page was last updated on 2009-11-29.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.