%0 Generic
%A Matsukawa, Isamu
%D 2006
%F mpra:991
%K priority service; monopoly; minimum reliability standard; price cap; rate of return regulation
%T Regulating a Monopoly Offering Priority Service
%U https://mpra.ub.uni-muenchen.de/991/
%X This paper investigates the effects of alternative forms of regulation on the market penetration and capacity, which are determined by a profit-maximizing monopolist providing  priority service to consumers.  For continuous priority service, a minimum reliability standard, price cap and rate of return regulation lead to larger capacity than in the absence of regulation.  A minimum reliability standard reduces the market penetration while price cap and rate of return regulation increase it.  The regulatory effects on the market penetration and capacity are also examined for discrete priority service, and policy implications of these effects are discussed for electricity supply industry.