Integration effects of firms subject to regulation

Journal Article · · Bell J. Econ. Manage. Sci.; (United States)

DOI:https://doi.org/10.2307/3003207· OSTI ID:7359410

Peles, Y; Sheshinski, E

The standard model of the regulated firm assumes that the monopoly produces one homogeneous output with two inputs, capital and labor. However, many firms subject to regulatory constraint, particularly public utilities, produce a multitude of products, with related or unrelated demands. This paper explores the modifications required by the latter case in the standard Averch-Johnson model. The effects of mergers between regulated monopolies is also studied. It is shown that, in general, mergers lead to changes in the composition of outputs, and the factors that determine the direction of these changes are analyzed. Finally, it is proved that the well-known result concerning the desirability of regulation can be extended, when demands are independent, to the many-good case. (10 references) (auth)

• Research Organization: Hebrew Univ., Jerusalem
• OSTI ID: 7359410
• Journal Information: Bell J. Econ. Manage. Sci.; (United States), Journal Name: Bell J. Econ. Manage. Sci.; (United States) Vol. 7:1; ISSN BJEMA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
293000* -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294003 -- Energy Planning & Policy-- Natural Gas
296000 -- Energy Planning & Policy-- Electric Power
DEMAND FACTORS
ECONOMICS
MATHEMATICAL MODELS
PUBLIC UTILITIES
REGULATIONS