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Regulating National Firms in a Common Market

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  • Sara Biancini

Abstract

We consider the regulation of national firms in a common market. Regulators can influence the production of national firms but they incur in a positive cost of public funds. First, we show that market integration is welfare improving if and only if the efficiency gains compensate for the negative public finance effect (related to business stealing). We also show that supranational competition can have very different consequences on the rent seeking behaviour of firms, depending on cost correlation and ex-ante technological risk. Finally, we characterize the global optimum and show how it can be sustained in a decentralized bargaining solution.

Suggested Citation

  • Sara Biancini, 2008. "Regulating National Firms in a Common Market," CESifo Working Paper Series 2209, CESifo.
    • Handle: RePEc:ces:ceswps:_2209
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    References listed on IDEAS

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    Cited by:

    1. Auriol, Emmanuelle & Biancini, Sara, 2009. "Economic Integration and Investment Incentives in Regulated Industries," TSE Working Papers 09-039, Toulouse School of Economics (TSE).

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