| Author: | Spiegel, Y. |
| Title: | The choice of technology and capital structure under rate regulation |
| Journal: | International Journal of Industrial Organization
1997 : APR, VOL. 15:2, p. 191-216 |
| Index terms: | INVESTMENT CAPITAL STRUCTURE OF COMPANIES TECHNOLOGY |
| Language: | eng |
| Abstract: | This paper examines a regulated firm's choice of technology. It presents a model in which regulatory opportunism induces the firm to adopt a technology that gives rise to cost functions with higher variable costs and lower fixed costs than is socially optimal. This distortion arises because the regulated price is positively correlated with marginal costs. Consequently, a technology with low marginal costs implies a low regulated price and hence is unattractive to the firm. |
SCIMA