Regulating a Monopolist with Unknown Costs

Optimal Bunching without Optimal Control

“…Goldman, Leland, and Sibley [8], Maskin and Laffont [15], and Mussa and Rosen [19]) or decreasing in θ for all x (cf. Baron and Myerson [1]; see also Laffont and Tirole [11]). It also holds in models of (monopoly) market making, as in Biais, Martimort and Rochet [2] (see also Glosten [6,7]), in which 0 ∈ (x, x) corresponds to the no-trade outcome satisfying u(0, θ) = 0 for all θ.…”

“…This possibility corresponds to the cases of optimal bunching discussed in Goldman, Leland and Sibley [8] and is the only possibility in models in which the agent's utility is monotonic in type (cf. Baron and Myerson [1], Mussa and Rosen [19]). Second, the point-wise solution is discontinuous if the agent's participation constraint is binding at an interior type (as in the models of market making and countervailing incentives mentioned above).…”

Nouvelles formes de réglementation

“…Le premier modèle qui a utilisé la théorie des incitations pour formaliser ce problème de la réglementation est le modèle de Baron-Myerson (1982). Ici la fonction de coût est à coût marginal constant mais information privée de l'entreprise.…”

Investment without regulatory commitment: The case of elastic demand

“…TJie firm's problem is then to max E -T + pD(p) -(D(p)) 2 6/2k -rk with respect to k, subject to equations (1), (6) and (7). After introducing these equations into II and solving for k we obtain…”

“…It becomes obvious later that the prior g(9), which plays a crucial role in screening models with commitment as [1], is totally irrelevant for the (separating) equilibrium without commitment.…”