The Investment Effects of Price Caps under Imperfect Competition: A Note

Anton Burger, Stefan Bühler, Robert Ferstl

Publication: Working/Discussion PaperWorking Paper/Preprint


This note analyzes a simple Cournot model where firms choose outputs
and capacities facing varying demand and price-cap regulation. We find
that binding price caps set above long-run marginal cost increase (rather than decrease) aggregate capacity investment.
Original languageEnglish
Publication statusPublished - 1 Sept 2008

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