A Regulatory Adjustment Process for Optimal Pricing by Multiproduct Monopoly Firms
Volume: Volume 10, No. 1
Issue: Spring 1979
Pages: pp. 157-171
Authors: Ingo Vogelsang and Jörg Finsinger
Title: A Regulatory Adjustment Process for Optimal Pricing by Multiproduct Monopoly Firms
Abstract: This paper describes an incentive mechanism that is shown to enforce the use of Ramsey prices by multiproduct monopolies. The constraint given is simple. It limits information requirements on the regulatory agency to bookkeeping data of the firm. Its implementation could be easily controlled by outside courts or auditors. The process, therefore, makes use of invisible hand properties shifting the workload of welfare optimization from the regulatory agency to the regulated firm.
JEL Classification
Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures (0226)
Regulation of Public Utilities (6130)