Economies of Scale and Scope, Contestability, Windfall Profits and Regulatory Risk

In this paper I introduce new results on economies of scale and scope and develop implications of these results for contestability and regulation. This is done using a goal programming approach which endogenizes regulatory frameworks in a multiperiod and multiregion monopolistic and oligopolistic analysis. This explicitly spatial approach leads to useful distinctions between industrial contestability and market contestability and a multiperiod contestability‐based regulatory model. That model is then extended to a state preference framework with regulatory risk and windfall gains and losses.