Measuring the Power of Regulatory Regimes

Dennis L. Weisman ()
Additional contact information
Dennis L. Weisman: Kansas State University

Review of Industrial Organization, 2023, vol. 62, issue 1, No 2, 19-32

Abstract: Abstract The power of a regulatory regime (PRR) measures the strength of the incentives for cost-reducing innovation. A static PRR metric is derived that is a function of: the regulated firm’s share of profits; the ratchet effect; and the Arrow effect. The analysis reveals that the dynamic PRR is significantly lower than the static PRR even for long-lived regulatory regimes. A key finding is that the literature may significantly overstate the PRR. This may help explain why the empirical findings with regard to the efficiency gains from price cap regulation do not offer unequivocal validation of the prevailing theory.

Keywords: Power of regulatory regimes; Price caps; Efficiency (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s11151-022-09879-6 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:revind:v:62:y:2023:i:1:d:10.1007_s11151-022-09879-6

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11151/PS2

DOI: 10.1007/s11151-022-09879-6

Access Statistics for this article

Review of Industrial Organization is currently edited by L.J. White

More articles in Review of Industrial Organization from Springer, The Industrial Organization Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().