Optimal regulation of lumpy investments
| Autor: | Peter Broer, Gijsbert Zwart |
|---|---|
| Rok vydání: | 2013 |
| Předmět: |
Economics and Econometrics
Investment timing Investment strategy media_common.quotation_subject Regulator Principal–agent problem Discretion Investment (macroeconomics) Microeconomics Information asymmetry Return on investment Economics Function (engineering) Inefficiency Private information retrieval Budget constraint media_common |
| Zdroj: | Journal of Regulatory Economics. 44:177-196 |
| ISSN: | 1573-0468 0922-680X |
| DOI: | 10.1007/s11149-013-9214-y |
| Popis: | When a monopolist has discretion over the timing of infrastructure investments, regulation of post-investment prices interferes with incentivizing socially optimal investment timing. In a model of regulated lumpy investment under uncertainty, we study regulation when the regulator can condition price caps on investment timing. We analyse optimal regulation when there is asymmetric information on investment costs and regulation has to respect a budget constraint. We show that optimal regulation involves a price cap that decreases as a function of the monopolist's chosen investment time. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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