When Does Electricity Price Cap Regulation Become Distortionary?

Price Cap Regulation Preliminary version

We study the effect of price cap regulation on investment in new capacity in an oligopolistic (Cournot) industry. We use a continuous time model with stochastic demand. The contribution of this paper is both theoretical and practical. On the theoretical side, we show that there exists an optimal price cap that maximizes investment incentives. Just as in the case of deterministic demand, the opt...

When does conscientiousness become perfectionism ?

Gordon L. Flett, PhD Canada Research Chair in Personality and Health York University Toronto Mr. C is a 50-year-old professional writer who recently made a serious suicide attempt. At his initial session, Mr. C was hesitant to discuss his situation and reason for attending. He did, however, bring a copy of his résumé so the therapist could “get to know him quickly.” He said he had been depresse...

When Does Influence Become Undue?

Is there 'Hope' for price cap regulation?

This article examines the problem of regulatory opportunism or strategic behavior by the regulator that undermines the performance of price cap regulation (PCR) without technically breaching the price cap commitment. Drawing from the experience with PCR in the telecommunications industry, this article contends that the Hope standard, a litmus test for governing the bounds of regulatory discreti...

Pharmaceuticals: Reference Pricing or Price Cap Regulation?

We study the relationship between regulatory regimes and pharmaceutical firms’ pricing strategies using a unique policy experiment from Norway, which in 2003 introduced a reference price (RP) system called “index pricing” for a sub-sample of off-patent pharmaceuticals, replacing the existing price cap (PC) regulation. We estimate the effect of the reform using a product level panel dataset, cov...