A Regulatory Bargain for Diversified Enterprises |
Common terms and phrases
allows the firm asymmetric information Braeutigam 1989 comparative statics competitive and noncompetitive competitive markets competitive noncore market consumer and producer consumer surplus core markets cost minimizing fashion Cost Minimizing Production customers in noncompetitive demand schedules diseconomies of scope diversification into competitive diversification is profitable diversified firms economically efficient economies of scope envelope theorem factor price factors of production firm can break firm cannot break firm is producing firm to earn firm under NBS firm under price form of regulation incentives increase total welfare induce the firm inefficient marginal cost markets served natural monopoly NBS firm NBS regulation noncompetitive markets noncompetitive outputs noncompetitive services Partially Regulated Second pdyd possible regulatory objective pºyº price cap formula price cap regulation prices are set producer surplus Property pure price cap qzd C(yd,zd rate of return regulated firm Regulated Second Best regulatory constraint return regulation sum of consumer surplus and welfare total expenditures total surplus