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RATE OF RETURN REGULATION: AN INDIRECT APPROACH

International Journal of Economics, Management and Accounting

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Title RATE OF RETURN REGULATION: AN INDIRECT APPROACH
 
Creator Wan Yusoff, Wan Sulaiman; Assistant Professor, Department of Economics, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Jalan Gombak, 53100 Kuala Lumpur, Malaysia.
 
Description This paper proposes an indirect method to the "Rate of Return Regulation" (ROR) or "Cost Based Regulation," by imposing ROR on monopoly firms through tax instruments, i.e., ad-valorem tax and consumption tax. The main objective in undertaking this theoretical study of industrial economics is to investigate and compare the results of direct with indirect methods concerning the social cost of monopoly and monopoly distortions or "overcapitalization." The finding shows that the indirect method not only would not involve an inefficient allocation of resources but it is also much more demanding than the direct method in terms of government's information requirements and even increases the monopoly output higher than the level reached by direct regulation. This is relevant in the implementation of regulated firms especially in the period after privatization.JEL Classification: D420, L110
 
Publisher Kulliyyah of Economics and Management Sciences
 
Contributor —
 
Date 2013-02-27
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/53
 
Source International Journal of Economics, Management and Accounting; Vol 7, No 2 (1999)
 
Language en