Optimal Regulation: The Economic Theory of Natural Monopoly

Abstract

The cost structure of natural monopoly (economies of scale and scope) characterization of first and second best optimality surplus subsidy schemes for attaining first-best optimality Ramsey prices and the Vogelsang-Finsinger mechanism for attaining them time-of-use (TOU) prices and Riordan's mechanisms for attaining the optimal TOU prices multipart and self-selecting tariffs, and Sibley's method for using self-selecting tariffs to achieve optimality the Averch-Johnson model of how rate-of-return regulation induces inefficiencies analysis of regulation based on the firm's return on output, costs, or sales. Price-cap regulation regulatory treatment of uncertainty and its impact on the firm's behaviour methods of attaining optimality without direct regulation (contestability, auctioning the monopoly franchise).

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 158 citations exist upstream.