Abstract
In this chapter we address the issue of regulatory constraints, and their possible market failure motivations and inefficiency outcomes. Regulatory constraints have impacts on firms’ behavior similar to capital fixities; they are a rigidity that the firm has no control over even in the long run, so if the constraint is binding there will be a cost associated with it. They can also be thought of as environmental variables; they determine the regulatory environment the firm faces, and thus the constraints within which the firm must operate. In a sense, therefore, they are similar to external effects except that they typically impose costs on rather than generate benefits for producers, and do not imply spillovers.
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© 1999 Springer Science+Business Media New York
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Paul, C.J.M. (1999). Regulatory Structure and Costs. In: Cost Structure and the Measurement of Economic Performance. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-5093-8_7
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DOI: https://doi.org/10.1007/978-1-4615-5093-8_7
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4613-7317-9
Online ISBN: 978-1-4615-5093-8
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