Common Market with Regulated Firms
AbstractWe examine the effect of bilateral trade in a concentrated industry under Cournot competition, when firms are regulated by national agencies who care about national social welfare. We allow for differences in costs and market sizes and for asymmetric information between regulatory agencies and regulated firms. A national regulatory policy may or may not be publicly observed by foreign competitors. We show that it is optimal to allow states to subsidize their domestic firms: bilateral trade improves the allocative efficiency and reduces the agency costs of regulation. Strategic trade policy effects that appear when regulatory contracts are public are beneficial to both states and reduce incentive costs as well as allocative inefficiencies. Results extend to the case of segmented markets with export costs when states are allowed to use export subsidies as well as to regulate domestic production. They also extend under perfect information to an arbitrary number of states and regulated firms, to the existence of private importing firms and of a not too large export market.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (1997)
Issue (Month): 47 ()
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cécile AUBERT & Jérôme POUYET, 2004.
"Competition policy, regulation and the institutional design of industry supervision,"
Discussion Papers (REL - Recherches Economiques de Louvain), UniversitÃ© catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)
2004022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Cécile Aubert & Jérôme Pouyet, 2004. "Competition policy, regulation and the institutional design of industry supervision," Recherches économiques de Louvain, De Boeck Université, De Boeck Université, vol. 70(2), pages 153-168.
- Debande, Olivier, 2001. "Deregulating and privatizing statutory monopolies," Journal of Economics and Business, Elsevier, Elsevier, vol. 53(2-3), pages 111-137.
- Cecile Aubert & Jerome Pouyet, 2000. "Collusion Under Asymmetric Information and Institutional Incompleteness," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 0806, Econometric Society.
- Tangerås, Thomas P., 2012.
"Optimal transmission regulation of an integrated energy market,"
Energy Economics, Elsevier,
Elsevier, vol. 34(5), pages 1644-1655.
- Tangerås, Thomas P., 2010. "Optimal Transmission Regulation in an Integrated Energy Market," Working Paper Series, Research Institute of Industrial Economics 838, Research Institute of Industrial Economics.
- Sara Biancini, 2008. "Regulating National Firms in a Common Market," CESifo Working Paper Series, CESifo Group Munich 2209, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Robert Gary-Bobo).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.