We consider a model featuring a single-product natural monopoly, which faces evaders, i.e., individuals that may not … pay the price. By exerting a costly effort, the firm can deter evasion. To maximize the total surplus, a regulator sets … the price, the level of deterrence effort, and socially costly transfers to ensure the monopoly’s participation. We obtain …

We consider the regulation of a monopoly facing consumers that may evade payments, an important issue in public … utilities. To maximize total surplus, the regulator sets the price and socially costly transfers, ensuring that the monopoly … breaks-even. With costly effort, the firm can deter evasion. Under unit demand and fixed quality, price is independent of …

This chapter provides a comprehensive overview of the theoretical and empirical literature on the regulation of natural … monopolies. It covers alternative definitions of natural monopoly, public interest regulatory goals, alternative regulatory … institutions, price regulation with full information, price regulation with imperfect and asymmetric information, and topics on the …

This paper shows with a formal model that under monopoly regulation, OPEX-risk can be a source for a CAPEX-bias. If …-OPEX-CAPEX- share (FOCS) which is a variation of TOTEX-regulation and second, OPEX-mark-up. FOCS internalizes the CAPEX-bias and can be …

This paper studies the effect of soft-budget constraints in a pure adverse selection model of monopoly regulation. We … regulatory set-up in which firms are free to enter natural monopoly markets and to choose their price and output levels as in the …-up allows governments to avoid re-funding moneyloosing firms and that welfare is larger than under traditional regulation where …

The underlying concept of a “natural” monopoly is that costs for a given output are minimized when one firm produces …

The paper studies the impact of government budget constraint in a pure adverse selection problem of monopoly regulation …. The government maximizes total surplus but incurs some cost of public funds. An alternative to regulation is proposed in …-post with the private firms. This ex-post contracting set-up allows more flexibility than traditional regulation where …

paper we have accentuated the importance of quality regulation, which is a rather neglected field in the theory of … mechanism and Shleifer's yardstick Regulation. Unfortunately, in practical applications of these simple mechanisms the regulated … regulator must be extremely well-informed if he wants to apply this sort of regulation: except for the actual realizations of a …

This paper explores the implications of asymmetric cost information within the context of a regulated natural monopoly …