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

Anton Burger, Stefan Bühler, Robert Ferstl

Publication: Working/Discussion PaperWU Working Paper

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Abstract

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.

Publication series

SeriesWorking Papers / Research Institute for Regulatory Economics
Number2008,3

WU Working Paper Series

  • Working Papers / Research Institute for Regulatory Economics

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