This paper investigates a regulated company's capacity choices for a two-stage investment opportunity with growth … options, if the company faces a cost-based regulation. It uses a theoretical approach: A discrete-time mathematical model … specific investment behavior can be observed: Companies will first invest a small capacity in order to enter the market, but …

This paper addresses the issue of how regulatory constraints affect firm s investment choices when the firm has an … option to delay investment. The RPI-x rule is compared to a profit sharing rule, which increases the x factor in case profits … go beyond a given level. It is shown that a pure price cap and profit sharing are identical in their impact on investment …

The factor X in the RPI-X regulation aims to adjust price or revenue allowances to changes in total factor productivity …

This chapter provides a comprehensive overview of the theoretical and empirical literature on the regulation of natural … institutions, price regulation with full information, price regulation with imperfect and asymmetric information, and topics on the … measurement of the effects of price and entry regulation in practice. The chapter also discusses the literature on network access …