Title: Factor price changes, technical efficiency, and revenue requirements regulation
Authors: Baron, DP ×
De Bondt, Raymond #
Issue Date: 1982
Series Title: European Economic Review vol:19 issue:02/mrt pages:259-276
Abstract: A regulatory framework is considered in which output price adjustments can be initiated only by a change in the price of a non-capital input (e.g. fuel) at some time in the future which is uncertain. At that time there is a processing period and then an adjustment of the output price so that the revenues of the firm meet an allowed rate of return s. The regulated firm choosing a putty-clay technology is shown to overcapitalize for large values of s and to undercapitalize for sufficiently small values of s. A decrease in the length of the processing period is found to accentuate the extent of either the undercapitalization or overcapitalization resulting from the specified rate of return.
ISSN: 0014-2921
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Department of Managerial Economics, Strategy and Innovation (MSI), Leuven
× corresponding author
# (joint) last author

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