Comparative statics of a monopolistic firm facing price-cap and command-and-control environmental regulations

- Models of a twice-regulated monopolistic firm are developed.
- An exhaustive comparative statics analysis of the models is carried out.
- The comparative statics are intrinsic to the models.
- Several unanticipated results emerge from the analysis.
- A subset of the comparative statics is invariant to all the environmental regulations.

An exhaustive comparative statics analysis of a model of a monopolistic firm facing price-cap regulation and a variety of commonly implemented command-and-control environmental regulations is carried out. The comparative statics are intrinsic to each of the models and thus form their basic, empirically testable properties. Several unanticipated results emerge from the analysis. In particular, it is shown that a subset of the intrinsic comparative statics are qualitatively invariant to all of the commonly employed command-and-control environmental regulations that a price-cap regulated profit-maximizing monopoly might face, while others are specific to the type of command-and-control environmental regulation in place.