A monopolist regulated via a price cap may well have an incentive to changeother variables of interest to consumers, in an attempt to shift the cost and demandcurves in his favour. This paper develops a model in which the monopolist can varyproduct quality and the terms of a warranty, in response to price regulation. Theregulated and unregulated monopoly outcomes are compared with the Pareto-efficientoutcome.
|Publisher||Edinburgh School of Economics Discussion Paper Series|
|Number of pages||29|
|Publication status||Published - 21 Dec 1998|
|Name||ELSE working papers|