Dynamic Regulation with Technological Progress
AbstractThis paper develops a dynamic regulatory model wherein the regulator can introduce an entrant into a market characterised by asymmetric information about cost and the outcome of the technological progress. Whe there is passive entry, it is found that the optimal contract has a kink, i.e. it is no longer fully separating, but has a pooling interval. In such a case, the social welfare increases as entry deterrence effect countervails the traditional incentive of the firms to misrepresent their true cost.
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Bibliographic InfoPaper provided by Indira Gandhi Institute of Development Research- in its series Papers with number 135.
Length: 26 pages
Date of creation: 1996
Date of revision:
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Postal: INDIRA GANDHI; INDIRA GANDHI INSTITUTE OF DEVELOPMENT RESEARCH, GEN.VAIDYA MARG.GOREGAON (E) BOMBAY-400 065 INDIA.
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Web page: http://www.igidr.ac.in/
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REGULATION ; TECHNOLOGICAL CHANGE ; ASYMETRIC INFORMATION;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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