What determines the power of a regulatory regime?

Dennis L. Weisman

Economics Letters, 2021, vol. 199, issue C

Abstract: This paper derives a metric for the power of a regulatory regime (PRR) that is a function of the regulated firm’s share of profits, the ratchet effect and the Arrow effect. The power metric is non-monotonic in the earnings-sharing parameter when the regulator can affect prices ex post. An important finding, and a notable contrast with the literature, is that increased earnings sharing can increase both the regulated firm’s profits and the PRR.

Keywords: Power of regulatory regimes; Price caps; Efficiency; Competitive entry (search for similar items in EconPapers)
JEL-codes: L51 L96 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:199:y:2021:i:c:s0165176521000033

DOI: 10.1016/j.econlet.2021.109726

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