Investment timing and scale of operation under private information about demand forecast
Daniel Danau ()
Additional contact information
Daniel Danau: LET - Laboratoire d'économie des transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique
Working Papers from HAL
Abstract:
We study the regulatory policy of a monopoly facing stochastic demand for the service it provides after performing an irreversible investment in infrastructure. We find that under uncertainty, bundling the decisions about investment timing and scale of operation is beneficial. When public-private co-operation is necessary to cover the investment cost and accumulation of public funds is costly, waiting longer is traded-off against rationing consumers. As soon as informational asymmetries about traffic forecast appear, the regulator enlarges the waiting period even more but sets the quantity closer to the to the first best level, as compared to the second best environment. (Author's abstract)
Keywords: Stochastic demand; investment timing; regulation of monopoly; public-private financing (search for similar items in EconPapers)
Date: 2005
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00004668
References: Add references at CitEc
Citations:
Downloads: (external link)
https://shs.hal.science/halshs-00004668/document (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-00004668
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().