TY -
GEN
AU - Armstrong, Mark
AU - Sappington, David E.M
TI -
Chapter 27 Recent Developments in the Theory of Regulation
SN - 9780080551845
SN - 008055184X
SN - 0444824359
SN - 9780444824356
KW - Regulation
KW - Monopoly
KW - Asymmetric information
KW - Liberalization
PY - 2007
N2 - This chapter reviews recent theoretical work on the design of regulatory policy, focusing on the complications that arise when regulated suppliers have better information about the regulated industry than do regulators. The discussion begins by characterizing the optimal regulation of a monopoly supplier that is better informed than the regulator about its production cost and/or consumer demand for its product. Both adverse selection (“hidden information”) and moral hazard (“hidden action”) complications are considered, as are the additional concerns that arise when the regulator's intertemporal commitment powers are limited. The chapter then analyzes the design of practical policies, such as price cap regulation, that are often observed in practice. The design of regulatory policy in the presence of limited competitive forces also is reviewed. Yardstick regulation, procedures for awarding monopoly franchises, and optimal industry structuring are analyzed. The chapter also analyzes the optimal pricing of access to bottleneck production facilities in vertically-related industries, stressing the complications that arise when the owner of the bottleneck facility also operates as a retail producer.
UR - http://slubdd.de/katalog?TN_libero_mab2
ER -