Publication:
Price caps regulation with capacity precommitment

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorLemus Torres, Ana Belén
dc.contributor.authorMoreno, Diego
dc.contributor.editorUniversidad Carlos III de Madrid. Departamento de Economíaes
dc.date.accessioned2016-02-15T12:28:05Z
dc.date.available2016-02-15T12:28:05Z
dc.date.issued2014-08-01es
dc.description.abstractIn order to examine the effectiveness of price caps to regulate imperfectly competitive markets in which the demand is uncertain, we study a monopoly that makes irreversible capacity investments ex-ante, and then chooses its output upon observing the realization of demand. When capacity decisions have no precommitment value, price cap regulation remains fully effective. With capacity precommitment, however, the optimal price cap must trade off the incentives for capacity investment and capacity withholding, and is above the unit cost of capacity. While a price cap mitigates market power, it cannot eliminate inefficiencies. Capacity payments provide a useful complementary instrument.en
dc.description.sponsorshipWe gratefully acknowledge financial support from the Ministerio de Ciencia e Innovación, grant ECO2011‐29762.en
dc.format.mimetypeapplication/pdf
dc.identifier.issn2340-5031es
dc.identifier.repecwe1309
dc.identifier.urihttps://hdl.handle.net/10016/19349
dc.identifier.uxxiDT/0000001224es
dc.language.isoenges
dc.relation.hasversionhttp://hdl.handle.net/10016/25186
dc.relation.ispartofseriesUC3M Working papers. Economicsen
dc.relation.ispartofseries13-09es
dc.relation.projectIDGobierno de España. ECO2011-­29762es
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España*
dc.rights.accessRightsopen accessen
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/*
dc.subject.otherMonopolyen
dc.subject.otherMarket Poweren
dc.subject.otherPrice Cap Regulationen
dc.subject.otherCapacity Investmenten
dc.subject.otherCapacity Withholdingen
dc.subject.otherDemand Uncertaintyen
dc.titlePrice caps regulation with capacity precommitmenten
dc.typeworking paper*
dc.type.hasVersionAO*
dspace.entity.typePublication
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