Investment without Regulatory Commitment: The Case of Elastic Demand
AbstractThis paper analyzes a regulation game with asymmetric information and lack of commitment. It expands Besanko and Spulber's (1989) framework to the case of elastic demands using a generalized Nash solution. It is found that the most important property of the equilibrium with inelastic demand is not carried over to the elastic demand case, i.e., incomplete information worsens underinvestment, contrasting to Besanko and Spulber's result. Copyright 1994 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 6 (1994)
Issue (Month): 1 (February)
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Web page: http://www.springerlink.com/link.asp?id=100298
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- Evans, Joanne & Levine, Paul & Trillas, Francesc, 2008.
"Lobbies, delegation and the under-investment problem in regulation,"
International Journal of Industrial Organization,
Elsevier, vol. 26(1), pages 17-40, January.
- Joanne Evans & Paul Levine & Fransesc Trillas, 2006. "Lobbies, Delegation and the Under-investment Problem in Regulation," School of Economics Discussion Papers 2006, School of Economics, University of Surrey.
- Paul Levine & Neil Rickman, 2003.
"Price Regulation, Investment and the Commitment Problem,"
School of Economics Discussion Papers
0603, School of Economics, University of Surrey.
- Levine, Paul L & Rickman, Neil, 2002. "Price Regulation, Investment and the Commitment Problem," CEPR Discussion Papers 3200, C.E.P.R. Discussion Papers.
- Joerg Breitscheidel & Hans Gersbach, 2005. "Self-Financing Environmental Mechanisms," CESifo Working Paper Series 1528, CESifo Group Munich.
- Breitscheidel, Jörg, 2005. "Hold-up Problems with Respect to R&D Investment and Licensing in Environmental Regulation," ZEW Discussion Papers 05-86, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Breitscheidel, Jörg, 2005. "Self-financing Tax/Subsidy Mechanisms in Environmental Regulation with Many Firms," ZEW Discussion Papers 05-87, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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