Optimal regulation with unknown demand and cost functions.
The writer examines optimal regulation of a firm that has private information about both its cost and demand functions. He discusses Lewis and Sappington's (1998) analysis of this issue, considers a difficulty with their analysis, and proposes an alternative formulation of their model. He consider...
| Publicado en: | Journal of Economic Theory Vol. 84; no. 2; pp. 196 - 216 |
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| Formato: | Artículo |
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Academic Press Inc.
February 1999
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| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | The writer examines optimal regulation of a firm that has private information about both its cost and demand functions. He discusses Lewis and Sappington's (1998) analysis of this issue, considers a difficulty with their analysis, and proposes an alternative formulation of their model. He considers two broad types of problem: the case where private and social incentives are roughly aligned, which implies that optimal prices are weakly above marginal costs; and the case where private and social incentives diverge, implying that pricing below marginal cost might be optimal. |
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