EconPapers    
Economics at your fingertips  
 

A Pedagogical Note on the Superiority of Price-Cap Regulation to Rate-of-Return Regulation

Kevin Currier and Brian K. Jackson

The Journal of Economic Education, 2008, vol. 39, issue 3, 261-268

Abstract: The two forms of natural monopoly regulation that are typically discussed in intermediate microeconomics textbooks are marginal cost pricing and average cost pricing (rate-of-return regulation). However, within the last 20 years, price-cap regulation has largely replaced rate-of-return regulation because of the former's potential to generate more efficient pricing structures and strong incentives for cost reduction. However, price-cap regulation has received little attention in microeconomics textbooks. The authors provide a simple discussion of price-cap regulation that demonstrates its superiority over conventional rate-of-return regulation, which forms the basis for a lecture on contemporary natural monopoly regulation.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.3200/JECE.39.3.261-268 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jeduce:v:39:y:2008:i:3:p:261-268

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/VECE20

DOI: 10.3200/JECE.39.3.261-268

Access Statistics for this article

The Journal of Economic Education is currently edited by William Walstad

More articles in The Journal of Economic Education from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2020-08-03
Handle: RePEc:taf:jeduce:v:39:y:2008:i:3:p:261-268