The literature finds that pure price cap regulation (PCR) is a high-powered regulatory regime because it elicits the first-best level of cost-reducing effort. Conversely, the regulated firm underinvests in cost-reducing effort under PCR with earnings sharing. These findings, while standard in the literature, do not consider the strategic behavior of the regulator ex post. When the regulator controls competitive entry and the Hope standard applies the regulated firm is no longer the residual claimant for its efficiency gains even under pure PCR. The findings of the literature are reversed in this setting. The power of the regulatory regime may be higher under PCR with earnings sharing than under pure PCR. In fact, over a wide range of welfare weights, equilibrium investment in cost-reducing effort is zero under pure PCR. This may explain why the empirical evidence on the efficiency gains from PCR falls short of an unequivocal validation of the theory.

中文翻译：

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重新审视监管制度的力量

文献发现，纯粹的价格上限监管（PCR）是一种强大的监管机制，因为它引发了降低成本工作的最高水平。相反，受监管的公司在通过收益共享进行PCR的降低成本工作方面投资不足。这些发现虽然在文献中是标准的，但并未考虑监管机构事后的战略行为。当监管者控制竞争进入和希望该标准适用于即使在纯PCR下，受监管的公司也不再是其效率提高的剩余索取者。在这种情况下，文献的发现是相反的。在具有收益分享的PCR中，监管制度的权力可能比在纯粹PCR中更高。实际上，在广泛的福利权重范围内，在纯PCR的情况下，减少成本的均衡投资为零。这可以解释为什么关于PCR效率提高的经验证据缺乏对该理论的明确验证。