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» Economics » Political economy » Topics begins with T » Top price adjustment

Page modified: Wednesday, July 13, 2011 02:50:39

The top price adjustment (English price cap regularization) is a method for the adjustment of natural monopolies, which applies better" methods than contrary to some different theoretically for "practice-suited.

Natural monopolies develop primarily if high fixed costs, but comparatively small variable costs of production and/or the offer of a product or a service develop. An example of it is the telecommunications. Here i.d.R. a only one large offerer is owner over the entire net infrastructure. This offerer can work at it at least in the fixed network area (entrance to the net and connections) by far more cost-efficiently than several small offerers. A unreguliertes monopoly leads usually however to high prices, which are not optimally and politically mostly also not desired from view of the welfare theory.

The top price adjustment does not need extensive and frequently also not information over the monopolists, available for adjustment authorities. The enterprise which can be adjusted gets a price or with different offers, about far from and local calls, a weighted average price, which is adapted regularly downward. This adjustment orients itself at the inflation rate and at an expected productivity increase. With different offers it is left in addition to the monopolist, how it arranges the prices, as long as the given average price is reached. For the adjusted enterprise the top price adjustment means the advantage contrary to a price per unit permission for being able to make price adjustments more flexibly.

See also

  • Ramsey prices

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