Price caps and output floors: a comparison of simple regulatory rules

Article Abstract:

An examination of the advantages of output floor regulation over price cap regulation showed that output floor regulation results in lower prices and increased incentives for costs reduction especially in a competitive environment. Output floor regulation calls for firms to supply a definite amount of output, which in a competitive environment results in lower prices for consumers but results in less profits for shareholders. The control mechanism is based on information theory, wherein the definite level of regulation is the basis for economic activity.

Models, Industry regulations, Production standards, Government regulation of business, Trade regulation, Information theory, Information theory in economics

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Conspiracies and secret discounts in laboratory markets

Article Abstract:

Provision of secret discounts negatively affects sellers' price-fixing conspiracies. Utilization of laboratory strategies revealed that sellers tend to experience greater difficulties in maintaining collusive agreements when the likelihood of providing secret discounts is introduced. Introduction of secret discounts is also most likely to result in depreciation of prices to competitive levels.

Research, Price fixing, Discounts (Sales)

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