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Regulating a Monopolist with unknown costs and unknown quality capacity

Charles Blackorby () and Dezsoe Szalay ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We study the regulation of a firm with unknown demand and cost information. In contrast to previous studies, we assume demand is influenced by a quality choice, and the firm has private information about its quality capacity in addition to its cost. Under natural conditions, asymmetric information about the quality capacity is irrelevant. The optimal pricing is weakly above marginal costs for all types and no type is excluded.

Keywords: Asymmetric Information; Multi-dimensional Screening; Regulation (search for similar items in EconPapers)
JEL-codes: D82 L21 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2008
New Economics Papers: this item is included in nep-cta, nep-ind, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:858

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