Models of Price Regulation of Network Industries Cover Image

Modely cenovej regulácie sieťových odvetví
Models of Price Regulation of Network Industries

Author(s): Michal Fendek, Eleonora Fendeková
Subject(s): Economy
Published by: Ekonomický ústav SAV a Prognostický ústav SAV
Keywords: imperfect competition; network industry; natural monopoly; regulated price; normal profit; rate of return

Summary/Abstract: In relation with objectification and increases in nationwide operation effectiveness of natural monopolies in network industries on the market the role of regulation mechanisms is increasing. Its aim is the closest approximation of proportions between price and level of network industry products supply to the situation which would occur in the conditions of market competition. In this paper we are dealing with the issue of the price regulation on the network industries market. Besides the general characteristic of network industries regulation princip-les we will aim on presentation of type models of regulation. The conditions for equilibrium of network industries and methods of their regulations will be examined in the paper. We will analyze effectiveness comparison of the two frequently used schemes for monopoly price regulation – “rate of return regulation model” and “return on output regulation model”. Attention will be paid to the ways of quantification reasonable profit in models of regulation in network industries.

  • Issue Year: 58/2010
  • Issue No: 10
  • Page Range: 1039-1054
  • Page Count: 16
  • Language: Slovak
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