Behavior of the Firm Under Regulatory Constraint
重新审视了Averch-Johnson关于公平回报率管制导致企业过度投资的经典结论，指出其论证存在逻辑模糊和错误，并提出了新的理论框架，最终仍支持原结论。
A recent article in this Review by Averch and Johnson [3] on the fair rate of return regulation in public utilities industries (or more generally regulated industries) attracted the attention of many economists. In essence, Averch-johnson argues that the introduction of an constraint of a fair rate of return type would induce the firm to invest more than the original profit maximizing value of capital, and this would create an inefficient allocation of inputs. In addition to frequent citations in verbal arguments, it has invited some thieoretical extensions by economists such as WVestfield [8] and Klevorick [5]. All of the writers seem to accept the basic theoretical foundations set by Averch and Johnson. For example, Klevorick [5] recently proposed that the fair rate of return should be inversely related to the size of the capital of a firm. The intuitive basis for this is apparent, for it in effect creates a penalty as the amount of capital used by the firm increases.' However, it seems to me that AverchJohnson's original arguments are sketchy and contain somewhat ambiguous logic at several important points. Although their conclusion, for which they tried to find empirical support, that a firm will tend to increase its investment with the introduction of an active constraint seems to be correct, it does not follow from their arguments. In particular, there seems to be a serious error which arises from confusing movements along a curve and shifts of a curve. In Section II, we clarify those ambiguities, and if necessary, correct the mistakes. In the third section of this paper, we shall provide a new formulation of the problem. We shall find that the new formulation will give the same answer as AverchJohnson, namely that a firm will tend to invest more with the iiltroductioin of an active constraint. It should be noted however that while the conclusion happens to be the same, this was not the necessity, for we needed a completely new formulation to obtain the old conclusion.