This paper analyses the allocative properties of price cap regulation under very general hypothesis on the nature of the society’s preferences. We propose a generalised price cap that ensures the convergence to optimal (second best) prices in the long-run equilibrium for virtually any form of the welfare function. Hence, the result of the convergence to Ramsey prices of Laspeyres-type price cap regulation is a particular instance of our more general result. We also provide an explicit and relatively easy to calculate and implement price cap formula for distributionally weighted utilitarian welfare functions, as suggested by Feldstein (1972a).

Iozzi, A., Poritz, J., Valentini, E. (2002). Social preferences and price cap regulation. JOURNAL OF PUBLIC ECONOMIC THEORY, 4(1), 95-114 [10.1111/1467-9779.00090].

Social preferences and price cap regulation

IOZZI, ALBERTO;
2002-01-01

Abstract

This paper analyses the allocative properties of price cap regulation under very general hypothesis on the nature of the society’s preferences. We propose a generalised price cap that ensures the convergence to optimal (second best) prices in the long-run equilibrium for virtually any form of the welfare function. Hence, the result of the convergence to Ramsey prices of Laspeyres-type price cap regulation is a particular instance of our more general result. We also provide an explicit and relatively easy to calculate and implement price cap formula for distributionally weighted utilitarian welfare functions, as suggested by Feldstein (1972a).
2002
Pubblicato
Rilevanza internazionale
Articolo
Esperti anonimi
Settore SECS-P/01 - ECONOMIA POLITICA
Settore SECS-P/02 - POLITICA ECONOMICA
Settore SECS-P/03 - SCIENZA DELLE FINANZE
Settore SECS-P/06 - ECONOMIA APPLICATA
English
Con Impact Factor ISI
price cap; regulation; welfare function
Iozzi, A., Poritz, J., Valentini, E. (2002). Social preferences and price cap regulation. JOURNAL OF PUBLIC ECONOMIC THEORY, 4(1), 95-114 [10.1111/1467-9779.00090].
Iozzi, A; Poritz, J; Valentini, E
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/15535
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