Title

Intrinsic Comparative Statics Of A General Class Of Profit-Maximizing Rate-Of-Return Regulated Firms

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. © Oxford University Press 2007 All rights reserved.

Publication Date

4-1-2008

Publication Title

Oxford Economic Papers

Volume

60

Issue

2

Number of Pages

369-382

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1093/oep/gpm037

Socpus ID

41249103474 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/41249103474

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