Regulation by Prices and by Command

Amihai Glazer and Charles Lave

University of California Transportation Center, Working Papers from University of California Transportation Center

Abstract: Standard economic theory states that regulation by price is more efficient than regulation by command and control. Exceptions may arise of regulators have good knowledge of the supply curve. In practice, though, governments usually regulate by command and control, and do so when there is uncertainty about the technology of supply. We show that government may prefer to regulate by command and control when it cares about the investment decisions of a firm.

Keywords: Social; and; Behavioral; Sciences (search for similar items in EconPapers)
Date: 1995-06-01
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Journal Article: Regulation by Prices and by Command (1996)
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