The superior incentive properties of price cap regulation (PCR) derive from breaking the link between revenues and costs which renders the regulated firm the residual claimant for its efficiency gains. Under the Hope standard, regulated firms are constitutionally protected against confiscatory...

This paper examines price level regulation in two-sided markets with linear demands. We find that (i) price level regulation increases the price allocation asymmetry when reservation prices differ between the two sides of the market; and (ii) changes in the level of the price cap are divided...

This note reveals that while the monopolist has ideal incentives to innovate, consistent with Schumpeter’s original hypothesis, the oligopolist’s incentive to innovate is non-monotonic in its market share and approaches that of the monopolist in the limit as the number of identical firms...

This paper integrates two separate branches of the law and economics literature to demonstrate the two-sided risk of market exclusion by a vertically-integrated firm (VIF) with upstream and downstream market power. The ratio of downstream (retail) to upstream (wholesale) price margins is key to...

The analysis reveals that price cap regulation (PCR) as commonly implemented closely approximates atomistic Cournot competition in terms of the pass-through of both industry and firm-specific cost-reducing innovation when the invariance property holds. A key finding is that the aggregate...

In an October 22, 2009 Notice of Proposed Rulemaking, the Federal Communications Commission posed a number of questions regarding the merits of price discrimination given the two-sided structure of broadband markets. The law and economics literature finds that price discrimination is...