Price cap regulation: A case study of some pitfalls of implementation. Isaac, R. M. Journal of Regulatory Economics, 3(2):193--210, June, 1991.
Price cap regulation: A case study of some pitfalls of implementation [link]Paper  doi  abstract   bibtex   
There has been considerable discussion of price-cap regulation as an alternative to traditional rate-of-return regulation. This paper examines some of the practical pitfalls of price-cap regulation. First, a model of a terminating price cap is developed. Next, this model is used to propose some problems of implementation. These problems are evaluated in the context of a case study of the Tucson Electric Power Company, which faced a type of price cap for several years in the 1980s. Extensions of the specific case to more general lessons about price-cap regulation are considered.
@article{isaac_price_1991,
	title = {Price cap regulation: {A} case study of some pitfalls of implementation},
	volume = {3},
	issn = {0922-680X},
	shorttitle = {Price cap regulation},
	url = {http://www.springerlink.com/content/h001384l1wt2m017/abstract/},
	doi = {10.1007/BF00140958},
	abstract = {There has been considerable discussion of price-cap regulation as an alternative to traditional rate-of-return regulation. This paper examines some of the practical pitfalls of price-cap regulation. First, a model of a terminating price cap is developed. Next, this model is used to propose some problems of implementation. These problems are evaluated in the context of a case study of the Tucson Electric Power Company, which faced a type of price cap for several years in the 1980s. Extensions of the specific case to more general lessons about price-cap regulation are considered.},
	number = {2},
	urldate = {2012-04-06},
	journal = {Journal of Regulatory Economics},
	author = {Isaac, R. Mark},
	month = jun,
	year = {1991},
	keywords = {Business and Economics},
	pages = {193--210},
	file = {WP_90-26.pdf:files/36305/WP_90-26.pdf:application/pdf}
}

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