Resource title

Regulation under Financial Constraints

Resource image

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Resource description

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.

Resource author

Axel Gautier

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22826

Resource license

Adapt according to the presented license agreement and reference the original author.