Price-cap regulation and uncertain technical change

The paper studies the effect of price-cap regulation on the research behaviour of a regulated firm and an external developer who are pursuing an uncertain innovation. Contributions of this work include incorporating innovation uncertainty and imperfect appropriability of innovation rewards into the analysis. In contrast to existing literature, it is found that a tighter price-cap diminishes the incentives for cost-reduction.

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Year of publication:	2000
Authors:	Goel, Rajeev
Published in:	Applied Economics Letters. - Taylor & Francis Journals, ISSN 1350-4851. - Vol. 7.2000, 11, p. 739-742
Publisher:	Taylor & Francis Journals

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009202778