Price Caps and Price Floors: Entry Liberalization and the Stranded Asset Issue
1998
We show that a regulator can use diffuse information held by potential entrants in the market as a powerful incentive instrument even when neither government tranfers to firms nor the regulation of entrants is permitted. Optimal regulation involves a menu of price caps and price floors. The latter prevent the incumbent form competing too harshly when entry occurs inducing implicit financial punishments.
Keywords:
- Correction
- Source
- Cite
- Save
- Machine Reading By IdeaReader
0
References
0
Citations
NaN
KQI