This paper examines optimal price (i.e. lsquo;sliding scale') regulation of a monopoly when productivity and managerial effort are not observed. We show generally how to operationalize this model of incentive regulation and use actual data from electricity distribution in England and Wales to...

Dynamic principal-agent settings with asymmetric information but no commitment are well known to create a ratchet effect. Here, the most efficient agents must be provided with extra 'information rent' as an incentive to relinquish their informational advantage over an uninformed principal; this...

In a Dynamic setting, we compare procurement schemes in the form of a lump-sum payment with an optimal information-revealing menu of contracts without commitment. We find that lump-sum contracts generate two benefits. First, they always provide optimal levels of effort. Second, they 'tie the...

The view that some public authorities should be taken out of the day-to-day democratic process and made 'independent' is now widely accepted. Delegation to independent bodies has been shown to have beneficial commitment benefit in areas as widely diverse as monetary policy, international tade...

We consider two aspects of the commitment problem in price regulation with lobbying the ratchet effect and the hold-up problem. We set out a dynamic model of price regulation with asymmetric information where the regulated firm can ‘buy influence’ in a lobbying equilibrium. Firms can sink...