Welfare Implications of Fully Distributed Cost Pricing Applied to Partially Regulated Firms

George Sweeney

Bell Journal of Economics, 1982, vol. 13, issue 2, 525-533

Abstract: The profit-maximizing price structure of a multiproduct firm subject to fully distributed cost rules is considered. It is shown that a firm that sells in both regulated and unregulated markets would choose a dominated price vector. Similar incentives for inefficient pricing are provided to a firm that sells in markets subject to different regulatory authorities.

Date: 1982
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