AbstractIt is well known in the theoretical literature on deregulation, that any informative signal will be used to give the firm appropriate incentives. This paper presents a model of deregulation that draws on the multi-task model of Holmstrom and Milgrom (1991). Sufficient conditions are derived for deregulation to be optimal despite the existence of a signal that contains information about the firm’s activity. The conditions ensure that there is an adverse response by the firm whenever the regulator tries to use the signal for incentives.
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Bibliographic InfoPaper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec01-9.
Length: 23 pages
Date of creation: 2001
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Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-12 (All new papers)
- NEP-IND-2004-12-12 (Industrial Organization)
- NEP-REG-2004-12-12 (Regulation)
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