Please use this identifier to cite or link to this item:
https://hdl.handle.net/1822/61392
Title: | Optimal dynamic volume-based price regulation |
Author(s): | Bisceglia, Michele Cellini, Roberto Siciliani, Luigi Straume, Odd Rune |
Keywords: | Price regulation Quality Differential games |
Issue date: | Aug-2019 |
Publisher: | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
Abstract(s): | We consider a model of optimal price regulation in markets where demand is sluggish and asymmetric providers compete on quality. Using a spatial model, which is suitable to investigate the health care and education sector, we investigate within a dynamic set-up the scope for price premiums or penalties on volume. We show that the socially optimal time path of quality provision off the steady state can be replicated by a simple dynamic pricing rule where the dynamic part of the rule is ex-ante non-discriminatory in the sense that the price premium or penalty on volume is common across providers, despite their differing production costs. Whether the price schedule involves a penalty or a premium on volume relates to two concerns regarding production costs and consumer benefits, which go in opposite directions. Price adjustments over time occur only through the price penalty or premium, not time directly, which highlights the simplicity and thus applicability of this regulation scheme. |
Type: | Working paper |
URI: | https://hdl.handle.net/1822/61392 |
Publisher version: | https://www.eeg.uminho.pt/pt/investigar/nipe/Paginas/publicacoes.aspx |
Access: | Open access |
Appears in Collections: | NIPE - Documentos de Trabalho |
Files in This Item:
File | Description | Size | Format | |
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NIPE_WP_6_2019.pdf | Optimal dynamic volume-based price regulation | 941,02 kB | Adobe PDF | View/Open |