Regulation under Financial Constraints

Axel Gautier ()

No 16/2002, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: This article studies the problem of regulating a monopolist with unknown marginal cost. The originality of the paper is to consider that the regulator faces a cash-in-advance constraint. The introduction of such a constraint not only reduces the amount of public good provided but also limits the instruments available to the regulator. The wealth constraint could change the optimal regulatory contract from a two-part tariff, where the quantities produced depend on the firm's cost, to a fixed fee where the firm produces the same quantity whatever its cost.

Keywords: Regulation; Asymmetric information; Monopolist (search for similar items in EconPapers)
JEL-codes: D82 H42 L51 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Regulation under Financial Constraints (2004)
Working Paper: Regulation under financial constraints (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bonedp:162002

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