Production externalities and investment caps: A welfare analysis under uncertainty
نویسندگان
چکیده
منابع مشابه
Production under Uncertainty: A Characterization of Welfare Enhancing and Optimal Price Caps
We analyze the effect of price caps on equilibrium production and welfare in oligopoly under demand uncertainty. We find that high price caps always increase production and welfare as compared to the situation without price cap. Price caps close to marginal cost may lead to zero production, depending on the nature of uncertainty. We characterize the optimal price cap and show that typically, th...
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This paper shows how standard arguments supporting the imposition of price caps break down in the presence of demand uncertainty. In particular, though in the deterministic case the introduction or lowering of a price cap (above marginal cost) results in increased production, increased total welfare, decreased prices, and increased consumer welfare, we show that all of the above comparative sta...
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Using a simple analytical model incorporating benefits of a stock, costs of adjusting the stock, and uncertainty in costs, we uncover several important principles governing the choice of price-based policies (e.g., taxes) relative to quantity-based policies (e.g., tradable permits) for controlling stock externalities. Applied to the problem of greenhouse gases and climate change, we find that a...
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ژورنال
عنوان ژورنال: Journal of Economic Dynamics and Control
سال: 2019
ISSN: 0165-1889
DOI: 10.1016/j.jedc.2019.07.005