This paper analyzes the optimal choices of an entrepreneur who operates in a regulated sector, under uncertainty and asymmetric information. The entrepreneur chooses the firm's capital structure and the provision of effort, while the regulator sets a price rule that establishes the firm's...

This article studies how the managers of a regulated firm can use debt and equity contracts to constrain the regulator's policy through the contingent transfer of control to external investors with high relative liquidation value. External finance increases regulated income and facilitates...

A rate-of-return regime characterized by "fairness" satisfies two criteria: the total allowed return on the rate base is equal to the cost of capital, and the regulated firm should be able to raise capital without either gain or loss to existing equity holders. Assuming a monopoly firm with a...