Ex-Post Rate-of-Return Regulation on Oliopoly Market

사후적 이윤율 규제에 대한 이론적 평가

  • 김재철 (한국과학기술원 경영과학과) ;
  • 유병국 (한국과학기술원 경영과학과)
  • Published : 1989.12.01

Abstract

The present paper analyzes performance of a variant of rate-of-return regulation called the ex-post adjustment regulation put in effect in the Korean petroleum refinery sector. Unlike the traditional rate-of-return regulation on a monopoly, the regulation is first for the oligopolistic industry as a whole and second of the ex post nature. Under the regulation, at the end of each year, each firm is responsible to pay a certain portion of the excess of the total realized profits in the industry over the allowed profits. It is shown that if the excess profits are completely collected(including the interests), the social optimum can be realized. When only a portion of the excess profits can be collected, the regulation generally increases consumer surplus by making the firms more competitive. Each individual firm's production under the regulation depends on whether the firm's output is regarded as a strategic substitute or complement of other firms'output.

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References

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