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Shared inputs, over-capitalization, and regulation
Journal article   Peer reviewed

Shared inputs, over-capitalization, and regulation

Martin F. Grace
Economics letters, Vol.22(4), pp.381-384
1986
DOI: 10.1016/0165-1765(86)90102-3

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Abstract

When inputs are joint in production, a partially regulated firm has the incentive to allocate all joint inputs to the regulated jurisdiction. The regulated firm, if required to allocate costs, will have less of an incentive to over-capitalize.

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