We develop a theoretical model of long-run investment decisions on capacity in the context of a liberalized electricity … the level of capacity that maximizes social welfare, and compare it to a decentralized outcome. We show that in the … absence of any regulation, private investment decisions on capacity unambiguously lead to a socially sub-optimal outcome, and …

efficiency, taking into account the regulatory changes that have affected the European airline industry. We construct and … estimate a model that includes demand, capacity, and cost equations. The latter accounts for inefficiency and cost …