THE TREATMENT OF Z-FACTORS IN PRICE CAP PLANS

Authors
LOWRY MN KAUFMANN L
Citation
Mn. Lowry et L. Kaufmann, THE TREATMENT OF Z-FACTORS IN PRICE CAP PLANS, Applied economics letters, 2(10), 1995, pp. 406-408
Citations number
NO
Categorie Soggetti
Economics
Journal title
Applied economics letters → ACNP
ISSN journal
13504851
Volume
2
Issue
10
Year of publication
1995
Pages
406 - 408
Database
ISI
SICI code
1350-4851(1995)2:10<406:TTOZIP>2.0.ZU;2-A
Abstract
Z factors are a commonly misunderstood but important component of pric e cap regulation A typical concern is that they result in a double cou nting of special business conditions in the price cap index. This lett er explains the mathematical logic for Z factors and shows that they n eed not result in double counting. Implementation issues are briefly d iscussed.