Cost-of-service regulation that reduces prices will also reduce incentives to control cost. Increased output counteracts this trend when there are economies of scale. We derive closed-form approximations for the maximum cost increase that leaves a positive welfare gain when regulation reduces...

During the 1980s, a widespread belief that the Japanese economy was outperforming that of the US led to a search for causes. Perhaps top on the list was a view that the Japanese had rejected the US model of private market competition, substituting for it the use of very large horizontal and...