A Modified Yardstick Competition Mechanism
This paper analyzes a modified yardstick competition mechanism (MYC), where the yardstick employed consists of a tariff basket and total costs. This mechanism has a significant information advantage: the regulator ”only” needs to observe total costs and output of all firms. The modified yardstick competition mech- anism can ensure a socially optimal outcome when allowing for spatial and second degree price discrimination, without increas- ing the informational requirements. We also introduce regulatory lags in the model. A systematic comparison between the results of traditional yardstick regulation and modified yardstick regu- lation is carried out. Finally, we discuss the applicability of the mechanism.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: ++49 / (0)30 / 314 - 25 048
Fax: ++49 / (0)30 / 314 - 26 934
Web page: http://www.cni.tu-berlin.de
More information through EDIRC
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.:
- Reinhard Selten, 1974. "Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Games," Working Papers 023, Bielefeld University, Center for Mathematical Economics.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
- Joel Sobel, 1999. "A Reexamination of Yardstick Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(1), pages 33-60, 03.
- Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
- Tangerås, Thomas P., 1999.
"Collusion-Proof Yardstick Competition,"
674, Stockholm University, Institute for International Economic Studies.
- Goldman, M Barry & Leland, Hayne E & Sibley, David S, 1984. "Optimal Nonuniform Prices," Review of Economic Studies, Wiley Blackwell, vol. 51(2), pages 305-19, April.
- van Damme, E.E.C. & Potters, J.J.M. & Rockenbach, B. & Sadrieh, A., 2003.
"Collusion under Yardstick Competition : An Experimental Study,"
2003-009, Tilburg University, Tilburg Law and Economic Center.
- Potters, Jan & Rockenbach, Bettina & Sadrieh, Abdolkarim & van Damme, Eric, 2004. "Collusion under yardstick competition: an experimental study," International Journal of Industrial Organization, Elsevier, vol. 22(7), pages 1017-1038, September.
- Potters, J.J.M. & Rockenbach, B. & Sadrieh, A. & van Damme, E.E.C., 2004. "Collusion under yardstick competition : An experimental study," Other publications TiSEM 2f5fc044-063c-477d-bf98-d, Tilburg University, School of Economics and Management.
- Potters, J.J.M. & Rockenbach, B. & Sadrieh, A. & van Damme, E.E.C., 2003. "Collusion under Yardstick Competition : An Experimental Study," Discussion Paper 2003-97, Tilburg University, Center for Economic Research.
- Kevin Currier, 2005. "Strategic Firm Behavior Under Average-Revenue-Lagged Regulation," Journal of Regulatory Economics, Springer, vol. 27(1), pages 67-79, September.
- Vogelsang, Ingo, 1988. "A Little Paradox in the Design of Regulatory Mechanisms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 467-76, August.
- Finsinger, Jorg & Vogelsang, Ingo, 1981. "Alternative Institutional Frameworks for Price Incentive Mechanism," Kyklos, Wiley Blackwell, vol. 34(3), pages 388-404.
- Armstrong, M. & Cowan, S. & Vickers, J., 1992.
"Nonlinear Pricing and Price Cap Regulation,"
Economics Series Working Papers
99152, University of Oxford, Department of Economics.
- Chakravorty Ujjayant & Hochman Eithan & Zilberman David, 1995. "A Spatial Model of Optimal Water Conveyance," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 25-41, July.
- Spence, Michael, 1977. "Nonlinear prices and welfare," Journal of Public Economics, Elsevier, vol. 8(1), pages 1-18, August.
- Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, Elsevier.
- Sappington, David E M & Sibley, David S, 1988. "Regulating without Cost Information: The Incremental Surplus Subsidy Scheme," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(2), pages 297-306, May.
- Dag Morten Dalen, 1998. "Yardstick Competition and Investment Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(1), pages 105-126, 03.
- repec:ner:tilbur:urn:nbn:nl:ui:12-141666 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:cni:wpaper:2006-05. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabian Kirsch)The email address of this maintainer does not seem to be valid anymore. Please ask Fabian Kirsch to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.