Incomplete Regulation, Market Competition and Collusion
Regulators often do not regulate all firms competing in a given sector. Due to productsubstitutability, unregulated competitors have incentives to bribe regulated firms to have themoverstate their costs and produce less. The best collusion-proof contract entails distortions bothfor inefficient and efficient regulated firms (distortion ‘at the top’). But a contract inducingactive collusion may do better by allowing the regulator to ‘team up’ with the regulated firmto indirectly tax its competitor. The best such contract is characterized. It is such that theunregulated firm pays the regulated one to have it truthfully reveals its inefficiency.
|Date of creation:||2004|
|Contact details of provider:|| Postal: 15 Boulevard Gabriel Peri 92245 Malakoff Cedex|
Phone: 01 41 17 60 81
Web page: http://www.crest.fr
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.:
- Lucia Quesada, 2005. "Collusion as an Informed Principal Problem," Game Theory and Information 0504002, EconWPA.
- Jean-Jacques Laffont & David Martimort, 2000.
"Mechanism Design with Collusion and Correlation,"
Econometric Society, vol. 68(2), pages 309-342, March.
- R. Gary-Bobo & Y. Spiegel, 2003.
"Optimal state-contingent regulation under limited liability,"
THEMA Working Papers
2003-09, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Robert Gary‐Bobo & Yossi Spiegel, 2006. "Optimal state‐contingent regulation under limited liability," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 431-448, 06.
- Gary-Bobo, Robert J. & Spiegel, Yossi, 2003. "Optimal State-Contingent Regulation under Limited Liability," CEPR Discussion Papers 3920, C.E.P.R. Discussion Papers.
- Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2004-39. 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: (Florian Sallaberry)
If references are entirely missing, you can add them using this form.