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Natural monopoly regulation in the presence of cost misreporting

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  • Kevin Currier

Abstract

This paper explores the implications of asymmetric cost information within the context of a regulated natural monopoly. The paper provides a unifying framework for the analysis of cost padding and exaggeration, both of which are referred to simply as misreporting of costs. The paper studies the incentives embedded in the regulatory regime itself and shows how simple comparative statics may be useful in detecting falsification of the cost report which the regulated firm must submit to the regulator. Copyright International Atlantic Economic Society 2004

Suggested Citation

  • Kevin Currier, 2004. "Natural monopoly regulation in the presence of cost misreporting," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 32(1), pages 49-61, March.
    • Handle: RePEc:kap:atlecj:v:32:y:2004:i:1:p:49-61
    DOI: 10.1007/BF02298618
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    References listed on IDEAS

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    Cited by:

    1. Kevin Currier, 2006. "Quality-Adjusted Laspeyres Price Caps: A Graphical Analysis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 34(4), pages 481-490, December.

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