Combining Pricing Bands with Price Cap Regulation
Economics Bulletin, 2005, vol. 12, issue 8, 1-4
Within the context of natural monopoly regulation, price cap schemes are often combined with price bands in which a maximum percentage by which the price in a market can be raised or lowered is stipulated. In this note, we examine the feasibility of combining average-revenue-lagged and Laspeyres price cap regulation with price band regulation. Specifically, we study the impact of pricing bands on the known efficiency properties of these two price cap schemes.
JEL-codes: L5 (search for similar items in EconPapers)
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