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A monopolist in a simple two‐period model knows that a price cap will be imposed on a Laspeyres index of the firm's prices in the second period. (Tariff basket regulation is relevant to some UK utilities.) A simple example is developed to study the welfare changes that result from strategic weight manipulation by the firm as a consequence of its ability to adjust first‐period revenue shares and interperiod price relatives. Uniform regulation requiring an equal percentage reduction in all of the regulated firm's prices provides a natural standard for comparison. One particular configuration of parameters induces identical pricing and welfare under the two forms of regulation in the example. Otherwise, compared with uniform regulation in the example, Laspeyres index regulation raises producer welfare but reduces consumer welfare in the first period and may also reduce consumer welfare in the second period. A numerical illustration shows that total welfare may also be lower under Laspeyres regulation.

ABSTRACTA single product monopolist with constant unit costs, in a simple two‐period model, is aware that price regulation will be imposed in the second period. The form of the regulation is such that price in period 2 may not exceed 100 &#x004c;̄; per cent of price in period 1, where 0 < &#x004c;̄ < 1. The period 1 price will be set higher than it would be in the absence of anticipated regulation. However, it is not always the case that pre‐regulation price will be raised as &#x004c;̄ falls. The welfare effects are crucially dependent on the form of the demand function. Under constant elasticity of demand a reduction in &#x004c;̄ will reduce both consumers' and the producer's welfare. Under linear demand, consumers benefit and the producer loses as &#x004c;̄ is reduced and the resultant effect on aggregate welfare is ambiguous.

ABSTRACTThis paper seeks to determine whether, under bilateral monopoly, profit rate regulation induces an input price bias in addition to the well known Averch‐Johnson capital intensity bias. Using a Nash‐type employer‐union, fixed bargaining power model, it is found that regulation may induce lower as well as higher wage rates. Similarly, when the two parties are respectively capital equipment supplier and user, regulation of the user's profit rate has an ambiguous effect on the equipment rental rate. In both cases the input price effect is shown to depend on the elasticity of factor substitution and on how demand elasticity varies with output.

There is now a considerable literature on the Illyrian firm (that is, the firm which is assumed to maximise income per worker), and it has been argued that the analysis may have relevance for the labour‐managed or co‐operative enterprise. Significant contributions to this literature have been made by Domar (1966), Vanek (1970), Meade (1972, 1974) and others but the seminal paper is generally recognised to be that of Ward (1958).

AbstractAt sea around England and Wales, in an average year there can be 10–12 oil and chemical spillage incidents which require action to be taken, and occasionally a major spill may trigger monitoring studies and local controls on fishing activity. This paper discusses the scope of such incidents and their consequences by reference to two particular incidents; the loss of a container of the pesticide lindane from MV Perintis in the English Channel in 1989, and the grounding of the oil tanker Sea Empress in Wales in 1996 and the consequent oilspill. The latter of these incidents is also compared with the loss of the tanker Braer in Shetland in 1993.