Affiliations: Deakin Business School, Melbourne, Australia. E-mail: [email protected] | CRA International, Canberra, Australia
Abstract: Firms must often invest in large-scale capacity expansions in order to service their expectation of future demand. This is known as provisioning. This paper introduces and examines issues and contributions in optimal provisioning theory. It discusses some regulatory distortions and suggests how an awareness of optimal provisioning can improve regulatory outcomes.