Incomplete contracting and price regulation
AbstractThis paper deals with price regulation of a monopolistic distribution grid which sells a license to some retailer. The regulator aims at attaining efficient sale of the license and efficient relationship-specific investments of the agents. The first best can be attained by a sequential regulatory mechanism which gives the seller an option to grant the license but allows the buyer to make counteroffers. This sequential mechanism runs counter to the usual price-cap idea since possible upward but never downward renegotiation of the regulated prices is the vehicle to attain the first best.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 593.
Date of creation:
Date of revision: Apr 1999
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Regulation; Incomplete contracts; Hold-up problem;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-06-08 (All new papers)
- NEP-IND-1999-06-08 (Industrial Organization)
- NEP-MIC-1999-06-08 (Microeconomics)
- NEP-PUB-1999-06-08 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Using Cost Observation to Regulate Firms,"
368, Massachusetts Institute of Technology (MIT), Department of Economics.
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- Hart, Oliver D & Moore, John, 1988.
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Econometric Society, vol. 56(4), pages 755-85, July.
- Oliver Hart & John Moore, 1985. "Incomplete Contracts and Renegotiation," Working papers 367, Massachusetts Institute of Technology (MIT), Department of Economics.
- Hardman Moore, John & Hart, Oliver, 1985. "Incomplete Contracts and Renegotiation," CEPR Discussion Papers 60, C.E.P.R. Discussion Papers.
- d'ASPREMONT, Claude & GERARD-VARET, Louis-André, .
"Incentives and incomplete information,"
CORE Discussion Papers RP
-354, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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