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Incentives in Multi-Period Regulation and Procurement: A Graphical Analysis

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  • Georges Dionne

    (Université de Montréal et Centre de recherche sur les transports)

  • Claude Fluet

    ()
    (Université du Québec à Montréal)

Abstract

Cet article analyse les politiques de réglementation et d'achat public sur plusieurs périodes en présence d'asymétrie d'information entre le régulateur et les entreprises réglementées. Le cadre général de Laffont et Tirole est utilisé. Nous proposons une analyse graphique du modèle de second-rang en termes de la capacité d'engagement du régulateur. Comme dans Laffont et Tirole, nous distinguons les cas de plein engagement, d'engagement avec contrainte de renégociation et de non-engagement. Notre analyse graphique de l'environnement à deux périodes-deux types nous permet de mettre l'accent sur les fondements des principaux résultats concernant la nature des contrats incitatifs optimaux et de proposer des extensions à la contribution de Laffont et Tirole. Le modèle peut être appliqué à des secteurs où la production de biens publics (comme la sécurité dans le transport des matières dangereuses) est déléguée à des entreprises privées. This paper analyses multi-period regulation or procurement policies under asymmetricinformation-between the regulator and regulated firms within the general framework developed by Laffont and Tirole. We provide a graphical analysis of the second-best policy in terms of the regulator's commitment capacity. As in Laffont and Tirole, we distinguish between full commitment (long-term contracts that can be committed to), commitment and renegotiation (renegotiation-proof long-term contracts and noncommitment (a series of short-term contracts). Our graphical analysis of the two-period, two-type environment emphasizes the rationale of the main results concerning the form of the optimal incentive scheme and extends Laffont and Tirole's contribution. The analysis can be applied to situations where the production of a public good or service (such as the level of safety in the transport of hazardous materials) is delegated to private firms.

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Bibliographic Info

Paper provided by Université du Québec à Montréal, Département des sciences économiques in its series Cahiers de recherche du Département des sciences économiques, UQAM with number 9511.

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Date of creation: Oct 1995
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Handle: RePEc:cre:uqamwp:9511

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Keywords: Incitations; contrats à plusieurs périodes; réglementations; achats publics; contrainte de renégociation; information asymétrique. Incentives; multi-period contracts; regulation; procurement; renegotiation proofness; asymmetric information.;

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Cited by:
  1. Amigues, Jean-Pierre & Favard, Pascal & Gaudet, Gerard & Moreaux, Michel, 1998. "On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited," Journal of Economic Theory, Elsevier, vol. 80(1), pages 153-170, May.
  2. Touhami, A. & Martens, A., 1996. "Macroemesures in Computable General Equilibrium Models: a Probabilistic Treatment with an Application to Morocco," Cahiers de recherche 9621, Universite de Montreal, Departement de sciences economiques.

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