IDEAS home Printed from https://ideas.repec.org/a/taf/jeduce/v39y2008i3p261-268.html
   My bibliography  Save this article

A Pedagogical Note on the Superiority of Price-Cap Regulation to Rate-of-Return Regulation

Author

Listed:
  • Kevin M. Currier
  • Brian K. Jackson

Abstract

The two forms of natural monopoly regulation that are typically discussed in intermediate microeconomics textbooks are marginal cost pricing and average cost pricing (rate-of-return regulation). However, within the last 20 years, price-cap regulation has largely replaced rate-of-return regulation because of the former's potential to generate more efficient pricing structures and strong incentives for cost reduction. However, price-cap regulation has received little attention in microeconomics textbooks. The authors provide a simple discussion of price-cap regulation that demonstrates its superiority over conventional rate-of-return regulation, which forms the basis for a lecture on contemporary natural monopoly regulation.

Suggested Citation

  • Kevin M. Currier & Brian K. Jackson, 2008. "A Pedagogical Note on the Superiority of Price-Cap Regulation to Rate-of-Return Regulation," The Journal of Economic Education, Taylor & Francis Journals, vol. 39(3), pages 261-268, July.
    • Handle: RePEc:taf:jeduce:v:39:y:2008:i:3:p:261-268
    DOI: 10.3200/JECE.39.3.261-268
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.3200/JECE.39.3.261-268
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.3200/JECE.39.3.261-268?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Albane Degrassat-Théas & M. Bensadon & C. Rieu & M. Angalakuditi & C. Pen & P. Paubel, 2012. "Hospital Reimbursement Price Cap for Cancer Drugs," PharmacoEconomics, Springer, vol. 30(7), pages 565-573, July.
    2. repec:dau:papers:123456789/11666 is not listed on IDEAS

    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:taf:jeduce:v:39:y:2008:i:3:p:261-268. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/VECE20 .

    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.