This paper presents an analysis of a recently invented new form of price regulation. An index of prices of monopolistically supplied goods must never exceed the retail price index minus X. The main results of the chapter are as follows: (i) If the constant X is politically chosen, price-cap...

We analyze the allocative role of money as a numeraire in an intertemporal general equilibrium model with incomplete financial markets and nominal financial instruments. It is shown that regardless of their return specification nominal assets in net supply increase the consumption risk and...

This paper deals with price--cap regulation of a monopolistic distribution grid which sells a license to some retailer. The sale of the license is a long--term incomplete contract. Both the grid and the licensee engage in relationship--specific investments before the value and costs of the...