A regulatory adjustment process for optimal pricing by multiproduct monopoly firms
This paper describes an incentive mechanism that is shown to enforce the use of Ramsey prices by multiproduct monopolies. The constraint given is simple. It limits information requirements on the regulatory agency to bookkeeping data of the firm. Its implementation could be easily controlled by outs...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | en_US |
| Published: |
MIT Energy Laboratory
2006
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| Subjects: | |
| Online Access: | http://hdl.handle.net/1721.1/31315 |
| _version_ | 1826195456444596224 |
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| author | Vogelsang, Ingo Finsinger, Jörg |
| author_facet | Vogelsang, Ingo Finsinger, Jörg |
| author_sort | Vogelsang, Ingo |
| collection | MIT |
| description | This paper describes an incentive mechanism that is shown to enforce the use of Ramsey prices by multiproduct monopolies. The constraint given is simple. It limits information requirements on the regulatory agency to bookkeeping data of the firm. Its implementation could be easily controlled by outside courts or auditors. The process, therefore, makes use of invisible hand properties shifting the workload of welfare
optimization from the regulatory agency to the regulated firm. This may lead to the ironical conclusion that regulatory commissions should fire their economists. It, however, becomes both profitable and socially
beneficial for the regulated firms to employ them. *University of Bonn and M.I.T. Energy Laboratory, Cambridge, Mass.;
University of Bonn and International Institute of Management, Berlin,
respectively.
We owe thanks to various readers of a previous version. Truman Bewley,
Peter Diamond, Jonathan Goodman, Ray Hartman, Martin Hellwig, Roger Sherman, Christian von Weizs'acker and an anonymous referee will find that their suggestions have left traces in this paper. |
| first_indexed | 2024-09-23T10:12:58Z |
| format | Working Paper |
| id | mit-1721.1/31315 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T10:12:58Z |
| publishDate | 2006 |
| publisher | MIT Energy Laboratory |
| record_format | dspace |
| spelling | mit-1721.1/313152019-04-12T07:24:34Z A regulatory adjustment process for optimal pricing by multiproduct monopoly firms Vogelsang, Ingo Finsinger, Jörg Price regulation This paper describes an incentive mechanism that is shown to enforce the use of Ramsey prices by multiproduct monopolies. The constraint given is simple. It limits information requirements on the regulatory agency to bookkeeping data of the firm. Its implementation could be easily controlled by outside courts or auditors. The process, therefore, makes use of invisible hand properties shifting the workload of welfare optimization from the regulatory agency to the regulated firm. This may lead to the ironical conclusion that regulatory commissions should fire their economists. It, however, becomes both profitable and socially beneficial for the regulated firms to employ them. *University of Bonn and M.I.T. Energy Laboratory, Cambridge, Mass.; University of Bonn and International Institute of Management, Berlin, respectively. We owe thanks to various readers of a previous version. Truman Bewley, Peter Diamond, Jonathan Goodman, Ray Hartman, Martin Hellwig, Roger Sherman, Christian von Weizs'acker and an anonymous referee will find that their suggestions have left traces in this paper. 2006-03-13T15:56:28Z 2006-03-13T15:56:28Z 1978-08 Working Paper 04847588 http://hdl.handle.net/1721.1/31315 en_US MIT-EL 78-020WP 1164098 bytes application/pdf application/pdf MIT Energy Laboratory |
| spellingShingle | Price regulation Vogelsang, Ingo Finsinger, Jörg A regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| title | A regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| title_full | A regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| title_fullStr | A regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| title_full_unstemmed | A regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| title_short | A regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| title_sort | regulatory adjustment process for optimal pricing by multiproduct monopoly firms |
| topic | Price regulation |
| url | http://hdl.handle.net/1721.1/31315 |
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