Review of Economic Studies Vol. 57 No. 3 1990
Prices vs. Quantities and Delegating Price Authority to a Monopolist
Abstract
This paper examines the desirability of allowing a monopolist to determine the market price. The author finds that none of the regulatory mechanisms previously discussed in the "price versus quantities" literature strictly dominates unregulated, monopoly price-setting. Furthermore, despite suggestions by others, price-setting by a regulated monopolist whose profits coincide with society's net benefits is not always the most desirable means of control. Quantity-setting by such a monopolist may instead be the preferred choice. Combining both into one incentive-compatible mechanism provides the best regulatory scheme and one in which the regulator need not be informed about costs.
- DOI
- 10.2307/2298028
- Volume
- 57
- Issue
- 3
- Pages
- 521
- Sources
- bibtex:phds-export.bib crossref openalex