|
| |
| Sara Biancini |
| |
| ''Incomplete Regulation, Competition and Entry in Increasing Returns to Scale Industries'' |
| ( 2010, Vol. 12 No.6 ) |
| |
| |
| The paper analyzes the effects of liberalization in increasing-returns-to-scale industries. It determines the optimal regulation of an incumbent competing with an unregulated strategic competitor, when public funds are costly. The model reveals the trade-off between productive and allocative effciency. Moreover, the welfare gains from liberalization, as compared with regulated monopoly, are a non-monotonic function of the cost of public funds. Finally, in the case of severe governmental cash constraints, incomplete regulation may dominate the full regulation of duopoly. |
| |
| |
| Keywords: Incomplete Regulation, Asymmetric Information, Incentives, Cost of Public Funds. |
JEL: L5 - Regulation and Industrial Policy: General
|
| |
| Manuscript Received : Jun 07 2008 | | Manuscript Accepted : Mar 07 2012 |
|
