E-raamat: Impact of Rate-of-Return Regulation on Technological Innovation [Taylor & Francis e-raamat]

Seeks to determine whether regulated monopolies engage in more or less technological innovation than unregulated monopolies. Overviews the historical development of regulation in general and rate-of-return regulation in particular, and looks in detail at the theoretical model of rate-of-return regulation put forth by Harvey Averch and Leland Johnson, as well as some of the key extensions and criticisms of this model. Two theoretical chapters provide an augmented version of the Averch-Johnson model, and an analysis of research joint ventures when rate-of-return regulation is present. A case example estimates a translog cost function using a sample of 10 privately owned electric utilities. Frank is affiliated with Sam Houston State University. Annotation c. Book News, Inc., Portland, OR (booknews.com)

Using theoretical models such as the Averch-Johnson model and a two-stage Nash equilibrium model, Frank looks at what impact government rate of return regulation has on the level of technological innovation of firms in a monopolistic market structure.

This book contends that various forms of regulation have costs as well as benefits and it examines the impact of government regulation on the innovativeness of ’monopolies’ - in this book meaning firms with the power to affect market price. The government regulation analyzed in this case is limited to rate-of-return regulation. Using theoretical models such as the Averch-Johnson model and a two-stage Nash equilibrium model, this volume examines whether regulated monopolies engage in more or less technological innovation than unregulated monopolies. Furthermore, if the unregulated (or less regulated) monopolies do engage in more research and development than regulated ones, it questions whether social welfare would be greater with the former. Using a case study of ten privately-owned electric utilities in the State of Texas, USA, it then tests out the general propositions brought forward by the theoretical modelling and finally makes its conclusions taking into consideration both theoretical and empirical findings.