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Deregulation

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  • Rohan Pitchford

Abstract

It is well known in the theoretical literature on deregulation, that any informative signal will be used to give the firm appropriate incentives. This paper presents a model of deregulation that draws on the multi-task model of Holmstrom and Milgrom (1991). Sufficient conditions are derived for deregulation to be optimal despite the existence of a signal that contains information about the firm’s activity. The conditions ensure that there is an adverse response by the firm whenever the regulator tries to use the signal for incentives.

Suggested Citation

  • Rohan Pitchford, 2001. "Deregulation," International and Development Economics Working Papers idec01-9, International and Development Economics.
    • Handle: RePEc:idc:wpaper:idec01-9
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    File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC01-9.pdf
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    References listed on IDEAS

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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