A Simple Model of Firm Behavior Under Regulation and Uncertainty

Stewart C. Myers

Bell Journal of Economics, 1973, vol. 4, issue 1, 304-315

Abstract: This paper is an analysis of how a firm behaves in the face of uncertainty about demand and cost conditions and a known constraint on the rate of return it is allowed to earn. Under these conditions it is improbable that regulation could force a monopoly to make competitive investment and output decisions. This discouraging result is due to uncertainty per se and not to the phenomena discussed by Averch and Johnson.

Date: 1973
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