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Michael R. Caputo and M. Hossein Partovi
''Reexamination of the A-J effect''
( 2002, Vol. 12 No.10 )
We establish four necessary and sufficient conditions for the existence of the Averch-Johnson effect in a generalized version of their famous model of the rate-of-return regulated firm. The four necessary and sufficient conditions are then compared to the two stronger sufficient conditions for the Averch-Johnson effect found in the literature. Our analysis also permits us to put to rest a somewhat protracted debate about the very existence of the Averch-Johnson effect.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
L5 - Regulation and Industrial Policy: General
Manuscript Received : Aug 28 2002 Manuscript Accepted : Aug 28 2002

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