TY - JOUR
T1 - Rate of return regulation and product variety
AU - Besanko, David
AU - Donnenfeld, Shabtai
N1 - Funding Information:
*Besanko would like to acknowledge tion, Grant no. SES-8408335. Donnenfeld of Business Research. ‘See also White (1977) Donnenfeld Besanko, Donnenfeld and White (1987)
Funding Information:
support of the National Science Founda-financial support by the Israel Institute
Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 1988/8
Y1 - 1988/8
N2 - This paper examines the effect of rate of regulation on a monopolist that faces a market of observationally identical but heterogeneous consumers. Under plausible technological conditions, rate of return regulation increases the quality offered to any consumer and expands the variety of products it offers. Some consumers receive a quality that is greater than the socially optimal quality. Rate of return regulation unambiguously increases consumers' surplus. If the allowed rate of return is close to the monopoly rate of return, social welfare increases as well.
AB - This paper examines the effect of rate of regulation on a monopolist that faces a market of observationally identical but heterogeneous consumers. Under plausible technological conditions, rate of return regulation increases the quality offered to any consumer and expands the variety of products it offers. Some consumers receive a quality that is greater than the socially optimal quality. Rate of return regulation unambiguously increases consumers' surplus. If the allowed rate of return is close to the monopoly rate of return, social welfare increases as well.
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U2 - 10.1016/0047-2727(88)90012-6
DO - 10.1016/0047-2727(88)90012-6
M3 - Article
AN - SCOPUS:45449122866
VL - 36
SP - 293
EP - 304
JO - Journal of Public Economics
JF - Journal of Public Economics
SN - 0047-2727
IS - 3
ER -