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Deregulation

Author

Listed:
  • 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
    as

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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

    as
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    2. repec:bla:ecorec:v:59:y:1983:i:164:p:16-27 is not listed on IDEAS
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    4. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    5. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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    8. Schmidt, Klaus M, 1996. "The Costs and Benefits of Privatization: An Incomplete Contracts Approach," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(1), pages 1-24, April.
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    More about this item

    JEL classification:

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

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