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Regulation under financial constraints

Author

Listed:
  • GAUTIER, Axel

Abstract

This article studies a simple procurement problem (Laffont and Tirole,1993) where the regulator faces a cash‐in‐advance constraint. The introduction of such a constraint not only reduces the amount of public good provided but also limits the instruments available to the regulator. The wealth constraint could change the optimal regulatory contract from a two‐part tariff, where the quantities produced depend on the firm’s cost, to a less efficient fixed fee where the firm produces the same quantity whatever its cost.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • GAUTIER, Axel, 2004. "Regulation under financial constraints," LIDAM Reprints CORE 1815, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1815
    DOI: 10.1111/j.1467-8292.2004.00266.x
    Note: In : Annals of Public and Cooperative Economics, 75(4), 645-656, 2004
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    Cited by:

    1. Signe ANTHON & Peter BOGETOFT & Bo Jellesmark THORSEN, 2007. "A Bureaucrat'S Procurement Strategy: Budget Constraints And Rationing," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(2), pages 221-244, June.
    2. Antonio Estache & Liam Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    3. Anthon, Signe & Bogetoft, Peter & Thorsen, Bo Jellesmark, 2007. "Socially optimal procurement with tight budgets and rationing," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1625-1642, August.
    4. Gautier, Axel & Mitra, Manipushpak, 2002. "Financing Infrastructure under Budget Constraint," Bonn Econ Discussion Papers 15/2002, University of Bonn, Bonn Graduate School of Economics (BGSE).

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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