Regulation and information in a continuing relationship

David P. Baron*, David Besanko

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

198 Scopus citations

Abstract

Regulation typically involves a continuing relationship between a regulator and a firm, and that relationship is often complicated by asymmetric information. A multiperiod model of this relationship is analyzed in which a regulated firm has private information about its costs which may changed over time in a manner observable only to the firm. The regulator is assumed to be able to commit to a policy for the entire regulatory horizon, and the optimal pricing policy is shown to depend on an informativeness measure that indicates how information by the firm in one period will be used in future periods.

Original languageEnglish (US)
Pages (from-to)267-302
Number of pages36
JournalInformation Economics and Policy
Volume1
Issue number3
DOIs
StatePublished - Jan 1 1984

Keywords

  • Regulation
  • information economics
  • multiperiod model
  • revelation game

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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