Consistent Regulatory Policy under Uncertainty
This article is concerned with the effects of regulation on the risk and value of the regulated firm in a dynamic context. Current regulatory practice is shown to be logically deficient, since it ignores the effect of regulatory policy on the cost of capital and therefore on the appropriate allowed rate of return. A notion of consistency in regulatory policy is developed, and it is shown how consistent regulatory policies may be implemented once the valuation problem is solved.
Year of publication: |
1982
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Authors: | Brennan, Michael J. ; Schwartz, Eduardo S. |
Published in: |
Bell Journal of Economics. - The RAND Corporation, ISSN 0361-915X. - Vol. 13.1982, 2, p. 506-521
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Publisher: |
The RAND Corporation |
Saved in:
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