A TRANSACTIONAL COST APPROACH TO THE NATURAL MONOPOLY REGULATION
DOI:
https://doi.org/10.12775/EiP.2006.025Abstract
The transactional cost framework seeks to identify the characteristics of transactions that lead classical “spot markets” to fail, in the sense that the spot market is a more costly mode of exchange than alternative institutional arrangements (e.g. some type of long term contract or vertical integration).
This paper provides a theory of natural monopoly regulation that parallels the theory of the firm and the theory of contractual institutions.
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