Degree of regulation and the monopoly firm: further empirical evidence
A review of previous research on over-capitalization as a response to regulation of monopoly firms seeking to maximize their profits leads to econometric modeling of the concept. Steam-electric utilities in the private sector furnished data for the model. Results support the proposition that a regulated rate-of-return causes companies to use inputs inefficiently but not that it causes them to overcapitalize. Several interpretations are suggested, such as the effects of labor and other constraints and the possibility that regulations are not enforced or that rates of return are too high. Further investigation is recommended to assess these factors and the impact of peak loads. 13 references.
- Research Organization:
- Texas A and M Univ., College Station
- OSTI ID:
- 5166999
- Journal Information:
- South. Econ. J.; (United States), Journal Name: South. Econ. J.; (United States) Vol. 44:3; ISSN SECJA
- Country of Publication:
- United States
- Language:
- English
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290200* -- Energy Planning & Policy-- Economics & Sociology
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