Munich Personal RePEc Archive

Coasean Quality of Regulated Goods

Moszoro, Marian (2016): Coasean Quality of Regulated Goods. Published in: The B.E. Journal of Economic Analysis & Policy , Vol. 16, No. 4 (October 2016): pp. 1-13.

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Abstract

The quality of goods provided by public utilities depends on infrastructure features and operational inputs. I compare the economic efficiency that results from price ceilings and minimum quality standards (i.e., compliance with environmental, chemical, and performance standards and norms) imposed by a benevolent regulator to a Coasean bargaining solution between a median consumer and a monopolist. When quality is non-excludable and non-rival, rate-of-return regulation yields higher economic efficiency than price cap regulation.

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