Regulating a Monopolist with unknown costs and unknown quality capacity

We study the regulation of a firm with unknown demand and cost information. In contrast to previous studies, we assume demand is influenced by a quality choice, and the firm has private information about its quality capacity in addition to its cost. Under natural conditions, asymmetric information about the quality capacity is irrelevant. The optimal pricing is weakly above marginal costs for all types and no type is excluded.


Issue Date:
Jun 24 2008
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/269856
Language:
English
Total Pages:
42
JEL Codes:
D82; L21




 Record created 2018-03-23, last modified 2018-03-23

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