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A practical approach to quality-adjusted price cap regulation

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  • Currier, Kevin M.

Abstract

Price cap regulation is often combined with service quality regulation since price caps may create incentives for quality degradation. A service quality adjustment factor (the Q-Factor) in the price cap formula ensures that allowed prices fall as quality declines. This paper discusses some considerations in determining the appropriate form of the Q-Factor. The paper examines the difficulties involved in exploiting the price/quality tradeoff. In addition, the paper presents a quality-corrected price cap procedure--possessing desirable properties--that can be implemented with reasonable informational requirements.

Suggested Citation

  • Currier, Kevin M., 0. "A practical approach to quality-adjusted price cap regulation," Telecommunications Policy, Elsevier, vol. 31(8-9), pages 493-501, September.
    • Handle: RePEc:eee:telpol:v:31:y::i:8-9:p:493-501
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    Cited by:

    1. repec:kap:iaecre:v:17:y:2011:i:4:p:465-475 is not listed on IDEAS
    2. Resende, Marcelo & Cardoso, Vicente, 2019. "Mapping service quality in electricity distribution: An exploratory study of Brazil," Utilities Policy, Elsevier, vol. 56(C), pages 41-52.
    3. Kevin Currier, 2011. "Optimal Pricing and Entry Rules When a Regulated Dominant Firm Faces a Competitive Fringe," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(4), pages 465-475, November.
    4. Alexandre MARINHO & Marcelo RESENDE, 2019. "Service Quality In Electricity Distribution In Brazil: A Malmquist Approach," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(4), pages 687-712, December.

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