Optimal Regulation in the Presence of Reputation Concerns

Andrew Atkeson, Christian Hellwig and Guillermo Ordonez

No 17898, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study a market with free entry and exit of firms who can produce high-quality output by making a costly but efficient initial unobservable investment. If no learning about this investment occurs, an extreme "lemons problem" develops, no firm invests, and the market shuts down. Learning introduces reputation incentives such that a fraction of entrants do invest. If the market operates with spot prices, simple regulation can enhance the role of reputation to induce investment, thus mitigating the "lemons problem" and improving welfare.

JEL-codes: D21 D82 L15 L51 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-bec, nep-cta and nep-reg
Note: EFG IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published as Andrew Atkeson & Christian Hellwig & Guillermo Ordoñez, 2015. "Optimal Regulation in the Presence of Reputation Concerns," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 415-464.

Downloads: (external link)
http://www.nber.org/papers/w17898.pdf (application/pdf)

Related works:
Journal Article: Optimal Regulation in the Presence of Reputation Concerns (2015)
Working Paper: Optimal Regulation in the Presence of Reputation Concerns (2014)
Working Paper: Optimal regulation in the presence of reputation concerns (2012)
Working Paper: Optimal Regulation in the Presence of Reputation Concerns (2009)
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:nbr:nberwo:17898

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w17898

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().