Incomplete Regulation, Competition, and Entry in Increasing Returns to Scale Industries
AbstractThe paper analyzes the effects of liberalization in increasing returns to scale industries. It determines the optimal regulation of an incumbent competing with an unregulated strategic competitor, when public funds are costly. The model reveals the trade-off between productive and allocative efficiency. Moreover, the welfare gains from liberalization, as compared with regulated monopoly, are a nonmonotonic function of the cost of public funds. Finally, in the case of severe governmental cash constraints, incomplete regulation may dominate the full regulation of duopoly. Copyright � 2010 Wiley Periodicals, Inc..
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 12 (2010)
Issue (Month): 6 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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Other versions of this item:
- Sara BIANCINI, 2009. "Incomplete Regulation, Competition and Entry in Increasing Returns to Scale Industries," THEMA Working Papers 2009-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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