SHOULD REGULATORS BE MORE PROACTIVE ABOUT ENTRY? AN EVALUATION UNDER ASYMMETRIC INFORMATION

• Type: Article in International Scientific Journal
• Date: 2012

Authors

Paula Sarmento (Author) FEP; António Brandão (Author) FEP

Journal

Title: Hitotsubashi Journal of Economics

Vol. 53 No. 1

Pages: 71-84

ISSN: 0018-280X

Publisher: Sanseido Publishing Company, Ltd.

Indexing

ISI Web of Knowledge - 0 Citations

ISI Web of Science

Scopus - 0 Citations

Scientific classification

FOS: Social sciences > Other social sciences

CORDIS: Social sciences

Other information

Authenticus ID: P-002-982

Abstract (EN): 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 and 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 designs a mechanism to motivate the incumbent firm to price truthfully. We conclude that for a wide range of situations, social welfare is strictly higher with the more active regulatory policy.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 14