PRICE-CAP VERSUS RATE-OF-RETURN REGULATION IN A STOCHASTIC-COST MODEL

• 成果类型: Article
• 署名作者: PINT, EM
• 署名单位: University of Oxford; RAND Corporation
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.2307/2555906
• 发表日期: 1992
• 页码: 564-578
• 关键词: firm

摘要

A stochastic-cost model is used to show that both price-cap and rate-of-return regulation lead to overinvestment in capital and to excessive managerial slack. However, they differ in stochastic versus fixed intervals between hearings and in the use of test-year costs versus average costs since the previous hearing. A numerical example illustrates that fixed intervals between hearings improve welfare if hearings are not held too frequently, but most gains go to the firm. More significantly, the use of average-cost data combined with fixed intervals results in dramatic welfare improvements, with most gains going to consumers.