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Incitamentsreglering av monopol med styckvis linjär approximation av efterfrågan

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  • Lantz, Björn

    () (Department of Business Administration, School of Economics and Commercial Law, Göteborg University)

Abstract

One anonymous mechanism for monopoly regulation is the Chord-approximation Adjustment Process, CAP, suggested by Vogelsang (1988) where the change in consumer surplus is approximated as an average between a Laspeyres and a Paasche index. The main drawback of this method is an incentive for strategic pricing behaviour so that the price will not converge to marginal cost whenever demand is not linear. This paper shows how the change in consumer surplus under a non-linear demand curve can be approximated piecewise linearly based on solely verifiable information which removes the incentive for strategic behaviour.

Suggested Citation

  • Lantz, Björn, 2005. "Incitamentsreglering av monopol med styckvis linjär approximation av efterfrågan," FE rapport 2005-407, University of Gothenburg, Department of Business Administration.
  • Handle: RePEc:hhb:gunwba:2005_407
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    File URL: http://hdl.handle.net/2077/2607
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    Keywords

    Monopoly regulation; incentive regulation;

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