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Price cap regulation under duopoly

Author

Listed:
  • Pu‐yan Nie
  • Hong‐xing Wen
  • Chan Wang

Abstract

This article captures price cap regulation under duopoly with game theory approaches. First, price cap regulation reduces price difference, output difference, and price dispersion under both Cournot and Stackelberg competition. Second, price cap regulation weakens the advantages of both costs and first‐mover. Third, price cap regulation reduces firms' profits while promotes consumer surplus. Finally, the relationship between the social welfare and price cap regulation is an inverse U‐shape. Therefore, optimal price cap regulation exists.

Suggested Citation

  • Pu‐yan Nie & Hong‐xing Wen & Chan Wang, 2023. "Price cap regulation under duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1376-1382, April.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:3:p:1376-1382
    DOI: 10.1002/mde.3766
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    References listed on IDEAS

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