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Recipes for Monopoly Regulation


Christian Holzleitner

This monograph was the winner of the Nestlé Prize 2000 for the best Austrian PhD-Thesis in the Social Sciences.
As it is not possible to introduce competition into every single market, there will still remain monopolies – like in the telecom or energy sector – which have to be put under public regulation. This book offers a look into the latest developments in regulatory practice and theory. What shall a regulator do when she wants to give incentives for cost minimization to the regulated firm and at the same time efficient prices to the consumers? After a comparison of different «real world» regulatory regimes, a simple theoretical model is used to assess the «real world» approaches and design optimal policies. The theoretical «recipes» are presented in a way which should be accessible to advanced students and «real world» regulators.
Contents: Regulatory Practice from Rate-of-Return to Incentive Regulation – Regulatory Theory from Models of Hidden Effort for Cost Reduction to Models of Hidden Information about Exogenous and Endogenous Cost.