IDEAS home Printed from https://ideas.repec.org/a/rje/bellje/v1y1970ispringp129-142.html
   My bibliography  Save this article

Resource Allocation and the Regulated Firm

Author

Listed:
  • Elizabeth E. Bailey
  • John C. Malone

Abstract

This paper extends a simple economic model of the regulated firm to include a wider range of both management objectives and of regulatory constraint. The authors find that these generalizations in the assumptions are able to effect profound alterations in the conclusions. For example, if a firm is constrained to a fair return on invested capital, we find that the profit-maximizing firm would have an incentive to overcapitalize (the Averch-Johnson result), while the sales or output maximizing firm would have an incentive to undercapitalize. If any of several other methods of constraint are used, the authors find that there is no incentive to alter the relative amounts of labor and capital employed in the production process.

Suggested Citation

  • Elizabeth E. Bailey & John C. Malone, 1970. "Resource Allocation and the Regulated Firm," Bell Journal of Economics, The RAND Corporation, vol. 1(1), pages 129-142, Spring.
    • Handle: RePEc:rje:bellje:v:1:y:1970:i:spring:p:129-142
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0005-8556%28197021%291%3A1%3C129%3ARAATRF%3E2.0.CO%3B2-T&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meredith Fowlie, 2010. "Emissions Trading, Electricity Restructuring, and Investment in Pollution Abatement," American Economic Review, American Economic Association, vol. 100(3), pages 837-869, June.
    2. C. A. Knox Lovell, 1976. "Output of the Constrained Revenue Maximizing Firm," Eastern Economic Journal, Eastern Economic Association, vol. 3(1), pages 52-58, January.
    3. Milton Russell & Robert Shelton, 1974. "A model of regulatory agency behavior," Public Choice, Springer, vol. 20(1), pages 47-62, December.
    4. Paul L. Joskow & Roger G. Noll, 1981. "Regulation in Theory and Practice: An Overview," NBER Chapters, in: Studies in Public Regulation, pages 1-78, National Bureau of Economic Research, Inc.
    5. Philip Fanara Jr. & David M. Sweet, 1984. "What Do Regulated Firms Maximize?," The American Economist, Sage Publications, vol. 28(1), pages 44-48, March.
    6. Nongluk Buranabunyut & James Peoples, 2012. "An empirical analysis of incentive regulation and the allocation of inputs in the US telecommunications industry," Journal of Regulatory Economics, Springer, vol. 41(2), pages 181-200, April.
    7. Kalu, Timothy Ch. U., 1995. "A uniform profit margin policy and its effects on mineral producing firms The case of the oil industry," Resources Policy, Elsevier, vol. 21(1), pages 61-72, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:1:y:1970:i:spring:p:129-142. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.