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Licensed Unlicensed Requires Authentication Published by De Gruyter July 21, 2016

Coasean Quality of Regulated Goods

  • Marian W. Moszoro EMAIL logo

Abstract

The quality of goods provided by public utilities depends on infrastructure features and operational inputs. I compare the economic efficiency that results from price ceilings and minimum quality standards (i. e., compliance with environmental, chemical, and performance standards and norms) imposed by a benevolent regulator to a Coasean bargaining solution between a median consumer and a monopolist. When quality is non-excludable and non-rival, rate-of-return regulation yields higher economic efficiency than price cap regulation.

JEL Classification: H41; H54; L15; L43; L51

Acknowledgment

I am grateful to Emmanuelle Auriol and to three anonymous referees whose many suggestions led to a significant revision of this paper.

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Published Online: 2016-7-21
Published in Print: 2016-10-1

©2016 by De Gruyter

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