Title

Intrinsic comparative statics of a general class of profit-maximizing rate-of-return regulated firms

Authors

Authors

M. R. Caputo;M. H. Partovi

Comments

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Abbreviated Journal Title

Oxf. Econ. Pap.-New Ser.

Keywords

CONSTRAINT; BEHAVIOR; Economics

Abstract

An exhaustive comparative statics analysis of a general rate-of-return regulated, profit-maximizing model of the firm is carried out under a minimal set of assumptions. The resulting intrinsic comparative statics are contained in a positive semi-definite matrix. Each element of this matrix consists of a product of the A-J effect term and a Slutsky-like expression, thereby permitting the familiar interpretation of a compensated price change. The minimal set of assumptions allows a range of anomalous behavior that includes, inter alia, a reversal of the sign of the A-J effect and an increase in the use of an unregulated factor as a result of a compensated own-price increase. The implications of additional assumptions for the mathematical structure of the model and its economic consequences are discussed, and the equivalency relations among those assumptions are delineated. Throughout, mathematical results of the analysis are interpreted with a view to elucidating their intuitive economic significance.

Journal Title

Oxford Economic Papers-New Series

Volume

60

Issue/Number

2

Publication Date

1-1-2008

Document Type

Article

Language

English

First Page

369

Last Page

382

WOS Identifier

WOS:000254294900009

ISSN

0030-7653

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