This paper examines whether rate-of return regulation alters the input quantities firms use to produce their selected output level when the corresponding input prices change, in a manner similar to the Le Chatelier principle. More specifically, would the change in a rate regulated firm’s input...

The paper examines how having to comply with Phase 1 of Title IV of the 1990 Clean Air Act affected production cost and the substitution between fuel and non-fuel (labor, capital) inputs. Phase 1 required firms to reduce their sulfur dioxide emissions. Enacting procedures to reduce sulfur...