Regulatory Contestability and Cost Pass-Through

Weisman Dennis L. ()
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Weisman Dennis L.: Department of Economics, Kansas State University, Manhattan KS, 66506-4001, USA

The B.E. Journal of Economic Analysis & Policy, 2025, vol. 25, issue 2, 247-262

Abstract: Regulatory contestability posits that the threat of economic regulation disciplines pricing even in the absence of explicit regulatory mechanisms (e.g., cost-of-service regulation or price cap regulation). Formal modeling and numerical simulations reveal how regulatory contestability interacts with cost-reducing effort to limit the pass-through of costs. This may suggest that under certain conditions regulatory contestability can substitute for explicit regulatory mechanisms and potentially reduce the cost of regulation.

Keywords: regulatory contestability; competition; cost pass-through; cost-reducing effort (search for similar items in EconPapers)
JEL-codes: L51 L96 L98 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/bejeap-2024-0379

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