A Simple Theory of Deregulation

R. Pitchford

Working Papers from Australian National University - Department of Economics

Abstract: In traditional theories of regulation, any signal of a firm's activity that is informative will be used for an incentive scheme. This paper develops a simple theory of deregulation in which the manager of a firm is able to distort reports of firm activity, making the degreee of verifiability of performance endogenous. Sufficient conditions are derived for deregulation to be optimal despite the existence of a signal that contains information about the firm's activity.

Keywords: DEREGULATION; INFORMATION (search for similar items in EconPapers)
JEL-codes: L10 L20 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:fth:aunaec:342

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