English, Article, Journal or magazine article edition: Regulatory design under asymmetric information about demand Paula Sarmento; António Brandão

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Bookmark: http://trove.nla.gov.au/version/182222
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Regulatory design under asymmetric information about demand
Author
  • Paula Sarmento
  • António Brandão
Physical Description
  • preprint
Notes
  • In this paper we compare the costs of two regulatory policies about the entry of new firms. We consider an incumbent firm that has more information about the market demand than the regulator. Then, the incumbent firm can use this advantage to persuade the regulator to make entry more difficult. With the first regulatory policy the regulator uses the incumbent price pre-regulation to get information about the demand. With the second regulatory policy the regulator design a mechanism to motivate the incumbent firm to price truthfully. We conclude that, for enough high values of the probability of low demand, the welfare is higher with the second (more active) regulatory policy.
  • asymmetric information, entry regulation, signalling, adverse selection
  • RePEc:por:cetedp:0802
Language
  • English
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