Incomplete Regulation, Asymmetric Information and Collusion-Proofness
AbstractIn an incomplete regulation framework the Regulator cannot replicate all the possible outcomes by himself since he has no influence on some firms present in the market. When facing asymmetric information regarding the regulated firm’s costs, it may be better for the Regulator to allow the other competitors to extract a truthful report from her through side-payments in a collusion and therefore the “Collusion-Proofness Principle” may not hold. In fact, by introducing an exogenous number of unregulated competitors, Social Welfare differences seem to favour a Collusion-Allowing equilibrium. However, such result will strongly depend on the relative importance given by the Regulator to the Consumer Surplus.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 320.
Length: 43 pages
Date of creation: Apr 2009
Date of revision:
Incomplete Regulation; Asymmetric Information; Collusion; Market Competition;
Find related papers by JEL classification:
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-13 (All new papers)
- NEP-COM-2009-04-13 (Industrial Competition)
- NEP-CTA-2009-04-13 (Contract Theory & Applications)
- NEP-MIC-2009-04-13 (Microeconomics)
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.:
- Tangeras, Thomas P., 2002.
"Collusion-proof yardstick competition,"
Journal of Public Economics,
Elsevier, vol. 83(2), pages 231-254, February.
- Tangeras, T.P., 1999. "Collusion-Proof Yardstick Competition," Papers, Stockholm - International Economic Studies 674, Stockholm - International Economic Studies.
- TangerÃ¥s, Thomas P., 1999. "Collusion-Proof Yardstick Competition," Seminar Papers, Stockholm University, Institute for International Economic Studies 674, Stockholm University, Institute for International Economic Studies.
- Myerson, Roger B, 1979.
"Incentive Compatibility and the Bargaining Problem,"
Econometrica, Econometric Society,
Econometric Society, vol. 47(1), pages 61-73, January.
- Roger B. Myerson, 1977. "Incentive Compatability and the Bargaining Problem," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 284, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Laffont, J.J. & Martimort, D., 1996.
"Collusion Under Asymmetric Information,"
Papers, Toulouse - GREMAQ
95.389, Toulouse - GREMAQ.
- Aubert, CÃ©cile & Pouyet, JÃ©rÃ´me, 2006. "Incomplete regulation, market competition and collusion," Economics Papers from University Paris Dauphine 123456789/13654, Paris Dauphine University.
- Laffont, Jean-Jacques & Martimort, David, 1998.
"Mechanism Design with Collusion and Correlation,"
IDEI Working Papers
81, Institut d'Économie Industrielle (IDEI), Toulouse.
- CÃ©cile Aubert & JÃ©rÃ´me Pouyet, 2006.
"Incomplete regulation, market competition and collusion,"
Review of Economic Design, Springer,
Springer, vol. 10(2), pages 113-142, August.
- CÃ©cile Aubert & JerÃ´me Pouyet, 2004. "Incomplete Regulation, Market Competition and Collusion," Working Papers, Centre de Recherche en Economie et Statistique 2004-39, Centre de Recherche en Economie et Statistique.
- Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, Econometric Society, vol. 45(2), pages 427-38, March.
- Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
If references are entirely missing, you can add them using this form.