Regulation under Financial Constraints
This article studies a simple procurement problem (Laffont and Tirole,1993) where 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 less efficient fixed fee where the firm produces the same quantity whatever its cost. Copyright CIRIEC, 2004.
Year of publication: |
2004
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Authors: | Gautier, Axel |
Published in: |
Annals of Public and Cooperative Economics. - Wiley Blackwell. - Vol. 75.2004, 4, p. 645-656
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Publisher: |
Wiley Blackwell |
Saved in:
freely available
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