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Title:Regulation under Financial Constraints PDF Logo
Authors:Gautier, Axel
Issue Date:2002
Series/Report no.:Bonn econ discussion papers 2002,16
Abstract:This article studies the problem of regulating a monopolist with unknown marginal cost. The originality of the paper is to consider that 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 fixed fee where the firm produces the same quantity whatever its cost.
Subjects:Regulation
Asymmetric information
Monopolist
JEL:D82
L51
H42
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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