Price Cap, Revenue Sharing and Information Acquisition

Elisabetta Iossa and Francesca Stroffolini ()

Public Policy Discussion Papers from Economics and Finance Section, School of Social Sciences, Brunel University

Abstract: We study the incentives of regulated firms to acquire costly information under price cap regulation.We show that revenue sharing plans, in the spirit proposed by Sappington and Weisman(1996), can provide greater incentives for information acquisition than pure price capping and increase social welfare.

Pages: 22 pages
Date: 2004-02
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Related works:
Working Paper: Price Cap, Revenue Sharing and Information Acquisition (2004)
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