The Investment Effects of Price Caps under Imperfect Competition: A Note
AbstractThis note analyzes a simple Cournot model where firms choose outputs and capacities facing varying demand and price-cap regulation. We find that binding price caps set above long-run marginal cost increase (rather than decrease) aggregate capacity investment.
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Bibliographic InfoPaper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2008 with number 2008-17.
Length: 11 pages
Date of creation: Aug 2008
Date of revision:
capacity; investment; Cournot competition; price cap;
Other versions of this item:
- Buehler, Stefan & Burger, Anton & Ferstl, Robert, 2010. "The investment effects of price caps under imperfect competition: A note," Economics Letters, Elsevier, vol. 106(2), pages 92-94, February.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-13 (All new papers)
- NEP-MIC-2008-09-13 (Microeconomics)
- NEP-REG-2008-09-13 (Regulation)
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