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Bargaining and collusion in a regulatory relationship
Fiocco, Raffaele; Gilli, Mario - 2014
We investigate regulation as the outcome of a bargaining process between a regulator and a regulated firm. The regulator is required to monitor the firm's costs and reveal its information to a political principal (Congress). In this setting, we explore the scope for collusion between the...
Persistent link: https://www.econbiz.de/10010427154
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Inefficiency and Regulation in Credence Goods Markets with Altruistic Experts
Farukh, Razi; Kerkhof, Anna; Loebbing, Jonas - 2020
We study a credence goods problem - that is, a moral hazard problem with non-contractible outcome - where altruistic experts (the agents) care both about their income and the utility of consumers (the principals). Experts' preferences over income and their consumers' utility are convex, such...
Persistent link: https://www.econbiz.de/10012287878
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Incentives, Efficiency and Quality in Regulated Monopolies under Customer Ownership
Meade, Richard - 2015
We extend the theory of monopoly regulation under imperfect information to the case of customer, rather than investor, ownership. The firm's manager can exert two types of effort - a contractible effort to reduce costs, and a non-contractible effort to increase quality. The former decreases...
Persistent link: https://www.econbiz.de/10012624258
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Informational rents and the excessive entry theorem: The case of hidden action
De Pinto, Marco; Goerke, Laszlo; Palermo, Alberto - 2023
Entry in a homogeneous Cournot-oligopoly is excessive if there is business stealing. This prediction assumes that production costs reduce profits and welfare equally. However, this need not be the case. If there is asymmetric information, suppliers or employees can utilize their superior...
Persistent link: https://www.econbiz.de/10013548674
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Optimal incentive contracts to avert firm relocation
Pollrich, Martin; Schmidt, Robert C. - 2014
A unilateral policy intervention by a country (such as the introduction of an emission price) can induce firms to relocate to other countries. We analyze a dynamic game where a regulator offers contracts to avert relocation of a firm in each of two periods. The firm can undertake a...
Persistent link: https://www.econbiz.de/10010427153
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Quality monitoring, collusion and sub-contracting
Kuhn, Michael; Yan, Qianhui - 2006
We discuss the social welfare improvement under centralized and decentralized hierarchies and focus on supervisoris ability to monitor quality. Although the possibility of collusion against the principal is eliminated under decentralized hierarchy, the decentralization is dominating only if...
Persistent link: https://www.econbiz.de/10010319247
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Regulation of Cost and Quality under Yardstick Competition
Tangerås, Thomas P. - 2002
This paper analyses simultaneous regulation of cost and quality when firms have private, correlated information about productivity and the regulator receives a signal about quality. It is shown that managerial effort and expenditures on quality are positively correlated in the optimal contract....
Persistent link: https://www.econbiz.de/10010334894
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Optimal Risk Adjustment: The Trade-off between Risk Selection and Upcoding
Nuscheler, Robert; Vaclahovsky, Simon - 2023
Persistent link: https://www.econbiz.de/10014363749
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Auditing versus monitoring and the role of commitment
Jost, Peter-J. - In: Review of Accounting Studies (2021), pp. 1-34
This paper studies the effect of timing and commitment of verification in a principal-agent relationship with moral … simultaneously with his effort choice and auditing where the principal can condition her verification effort on the realized outcome … the time of contracting. The main contribution of this paper is to highlight the importance of commitment by the principal …
Persistent link: https://www.econbiz.de/10014501886
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Dynamic, incentive-compatible contracting for health services
Levaggi, Rosella; Moretto, Michele; Pertile, Paolo - 2023
This paper aims to characterise a dynamic, incentive-compatible contract for the provision of health services, allowing for both moral hazard and adverse selection. Patients' severity changes over time following a stochastic process and is private information of the provider. We characterise the...
Persistent link: https://www.econbiz.de/10014451718