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Kevin Currier
''Combining Pricing Bands with Price Cap Regulation''
( 2005, Vol. 12 No.8 )
Within the context of natural monopoly regulation, price cap schemes are often combined with price bands in which a maximum percentage by which the price in a market can be raised or lowered is stipulated. In this note, we examine the feasibility of combining average-revenue-lagged and Laspeyres price cap regulation with price band regulation. Specifically, we study the impact of pricing bands on the known efficiency properties of these two price cap schemes.
JEL: L5 - Regulation and Industrial Policy: General
Manuscript Received : Dec 13 2004 Manuscript Accepted : May 03 2005

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