Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25778
Authors: 
Auriol, Emmanuelle
Picard, Pierre M.
Year of Publication: 
2006
Series/Report no.: 
CESifo working paper 1733
Abstract: 
The paper studies the impact of government budget constraint in a pure adverse selection problem of monopoly regulation. The government maximizes total surplus but incurs some cost of public funds. An alternative to regulation is proposed in which firms are free to enter the market and to choose their price and output levels. However the government can contract ex-post with the private firms. This ex-post contracting set-up allows more flexibility than traditional regulation where government commits to both investment and operation cashflows. This is especially relevant in case of high technological uncertainties.
JEL: 
L43
L51
D82
L33
Document Type: 
Working Paper

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