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Price-cap regulation and market definition

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Abstract

One of the merits claimed for certain types of price-cap regulation is the possible long-run convergence of the prices of multi-product firms to Ramsey prices. Typically such regulated firms define commodities by such devices as dividing the day into discrete periods, customers into age-groups, distances into ranges, and so on. Allowing that such division is endogenous throws doubt on the ability of Laspeyre quantity-based price-caps to encourage an efficient market definition and hence to generate an efficient price structure.

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Authors and Affiliations

  1. Department of Economics, University of Leicester, LE1 7RH, Leicester, UK

    Ian Bradley

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  1. Ian Bradley
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Bradley, I. Price-cap regulation and market definition. J Regul Econ 5, 337–347 (1993). https://doi.org/10.1007/BF01065958

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  • DOI: https://doi.org/10.1007/BF01065958

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