Regulation under Financial Constraints
AbstractThis article studies the problem of regulating a monopolist with unknown marginal cost. The originality of the paper is to consider that the regulator faces a cash-in-advance constraint. The introduction of such a constraint not only reduces the amount of public good provided but also limits the instruments available to the regulator. The wealth constraint could change the optimal regulatory contract from a two-part tariff, where the quantities produced depend on the firm's cost, to a fixed fee where the firm produces the same quantity whatever its cost.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse16_2002.
Date of creation: Jun 2002
Date of revision:
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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
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Regulation; Asymmetric information; Monopolist;
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-09-21 (All new papers)
- NEP-PBE-2002-09-21 (Public Economics)
- NEP-REG-2002-09-21 (Regulation)
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- Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
- Tigran Melkonyan & Michael H. Taylor, 2013.
"Regulatory Policy Design for Agroecosystem Management on Public Rangelands,"
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- Tigran Melkonyan & Michael Taylor, 2010. "Regulatory Policy Design for Agroecosystem Management on Public Rangelands," Working Papers 10-007, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics.
- GAUTIER, Axel & MITRA, Manipushpak, 2003.
"Financing infrastructure under budget constraints,"
CORE Discussion Papers
2003037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Anthon, Signe & Bogetoft, Peter & Thorsen, Bo Jellesmark, 2007. "Socially optimal procurement with tight budgets and rationing," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1625-1642, August.
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