Welfare effects of discriminatory two-parts tariffs constrained by price caps
References (4)
Two-part tariffs as regulatory constraints
Journal of Public Economics
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Welfare effects of price discrimination by a regulated monopolist
Rand Journal of Economics
(1991)
Cited by (10)
On distributive effects of optimal regulation for power grid expansion
2014, Energy PolicyCitation Excerpt :Average-revenue regulation allows for greater flexibility in the Transco׳s tariff rebalancing strategy, but then lacks a method to converge to the welfare maximizing equilibrium. The literature has demonstrated that with a myopic (short-term oriented) profit maximization outlook and under stable (non-stochastic) cost and demand conditions, a chained Laspeyres index will cause firm prices to converge intertemporally to the Ramsey–Boiteaux pricing (Vogelsang, 2001, 1989; Bertoletti and Poletti, 1997; Loeb and Magat, 1979; Sibley, 1989). This is accomplished by simultaneously reconciling between social welfare maximization and the individual rationality of the regulated firm.
Regulating a monopoly with universal service obligations: The role of flexible tariff schemes
2014, Telecommunications PolicyCitation Excerpt :They found that allowing the firm this flexibility increases its profits and is detrimental for consumers if the price index is based on the quantities consumed at the new prices (i.e., a Paasche index), but it is Pareto improving if the price index weights are based on the quantities demanded under uniform pricing (i.e., a Laspeyre index). Bertoletti and Poletti (1997) extended this result to the case of non-linear tariffs and a setup where income effects are present. Our result that allowing full flexibility to the monopolist is first-best efficient is analogous to Vogelsang's (1990) result, once the initial set of prices is chosen to satisfy the universal access constraint and to leave no rent to the monopolist after it optimally designs the alternative plans.
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