The Investment Effects of Price Caps under Imperfect Competition: A Note

This note analyzes a simple Cournot model where firms choose outputs and capacities facing varying demand and price-cap regulation. We find that binding price caps set above long-run marginal cost increase (rather than decrease) aggregate capacity investment.

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Year of publication:	2008-08
Authors:	Bühler, Stefan ; Burger, Anton ; Ferstl, Robert
Institutions:	School of Economics and Political Science, Universität St. Gallen
Subject:	capacity \| investment \| Cournot competition \| price cap

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Extent:	application/pdf
Series:	University of St. Gallen Department of Economics working paper series 2008.
Type of publication:	Book / Working Paper
Language:	English
Notes:	11 pages
Classification:	D24 - Production; Capital and Total Factor Productivity; Capacity ; D43 - Oligopoly and Other Forms of Market Imperfection ; L13 - Oligopoly and Other Imperfect Markets ; L51 - Economics of Regulation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005453954