IDEAS home Printed from https://ideas.repec.org/p/fth/michet/89-01.html
   My bibliography  Save this paper

Carrot And Yardstick Regulation: Enhancing Market Performance With Output Prizes

Author

Listed:
  • BAGNOLI, M.
  • BORENSTEIN, S.

Abstract

The fundamental objective of most regulatory mechanisms is to expand output at a sufficiently low cost to consumers. Many useable mechanisms, such as Loeb and Magat's, require detailed demand information and substantial profit recapture by the regulator in order to achieve this objective. We present an apparently unexplored alternative approach--inducing competition among firms for shares of a monetary reward. Payments to a firm for output expansion thus depend on both its own behavior and the actions of other firms, which can even be firms in unrelated industries. We show that in a wide variety of circumstances, the resultant increase in consumer surplus exceeds the reward. Hence, even with no profit recapture, our approach can lead to Pareto improvements. Copyright 1991 by Kluwer Academic Publishers
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Bagnoli, M. & Borenstein, S., 1988. "Carrot And Yardstick Regulation: Enhancing Market Performance With Output Prizes," Papers 89-01, Michigan - Center for Research on Economic & Social Theory.
    • Handle: RePEc:fth:michet:89-01
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marques, Rui Cunha, 2006. "A yardstick competition model for Portuguese water and sewerage services regulation," Utilities Policy, Elsevier, vol. 14(3), pages 175-184, September.
    2. Haldun Evrenk & E. Zenginobuz, 2010. "Regulation through a revenue contest," Journal of Economics, Springer, vol. 99(3), pages 211-237, April.
    3. Kim, Jae-Cheol & Lee, Sang-Ho, 1995. "An optimal regulation in an intertemporal oligopoly market: The Generalized Incremental Surplus Subsidy (GISS) scheme," Information Economics and Policy, Elsevier, vol. 7(3), pages 225-249, September.
    4. Pereira Neto, Caio Mário da Silva & Casagrande, Paulo Leonardo & Lancieri, Filippo Maria & Porto Moraes, Joaquim Nogueira, 2016. "Pro-competition rules in airport privatization: International experience and the Brazilian case," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 9-16.

    More about this item

    Keywords

    enterprises ; consumers;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fth:michet:89-01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Krichel (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.