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Regulatory Contestability and Cost Pass-Through

Author

Listed:
  • Weisman Dennis L.

    (Department of Economics, Kansas State University, Manhattan KS, 66506-4001, USA)

Abstract

Regulatory contestability posits that the threat of economic regulation disciplines pricing even in the absence of explicit regulatory mechanisms (e.g., cost-of-service regulation or price cap regulation). Formal modeling and numerical simulations reveal how regulatory contestability interacts with cost-reducing effort to limit the pass-through of costs. This may suggest that under certain conditions regulatory contestability can substitute for explicit regulatory mechanisms and potentially reduce the cost of regulation.

Suggested Citation

  • Weisman Dennis L., 2025. "Regulatory Contestability and Cost Pass-Through," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 25(2), pages 247-262.
    • Handle: RePEc:bpj:bejeap:v:25:y:2025:i:2:p:247-262:n:1009
    DOI: 10.1515/bejeap-2024-0379
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    More about this item

    Keywords

    regulatory contestability; competition; cost pass-through; cost-reducing effort;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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