Regulatory Risk: Objections to the Theory

Part of the Topics in Regulatory Economics and Policy Series book series (TREP, volume 14)


Chapter 2 explored the broad consequences of regulatory policies that impose the risk of a substantial loss without an offsetting opportunity for a substantial gain (“asymmetric regulatory risk”). The logic of that chapter contended that the rate of return allowed by regulators must be in excess of the cost of capital in the presence of asymmetric regulatory risk, such as the prospect of large cost disallowances.


Cash Flow Stock Price Economic Principle Capital Asset Price Model Regulatory Risk 
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Copyright information

© Springer Science+Business Media New York 1993

Authors and Affiliations

  1. 1.The Brattle GroupUSA
  2. 2.Sloan School of ManagementMassachusetts Institute of Technology and The Brattle GroupUSA

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