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Identifier to cite or link to this item: https://doi.org/10.15057/23147
Identifier to cite or link to this item: https://hdl.handle.net/10086/23147

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Title
Should Regulators Be More Proactive About Entry? An Evaluation under Asymmetric Information
Creator
Creator Name
SARMENTO, PAULA SARMENTO, PAULA
Affiliation
Affiliation Name
University of Porto
Creator Name
BRANDÃO, ANTÓNIO BRANDÃO, ANTÓNIO
Affiliation
Affiliation Name
University of Porto
Key Word
entry regulation
signaling
mechanism design
JEL
C73
D82
L13
L51
Abstract
We compare the costs oftwo regulatory policies about the entry ofnew firms. We consider an incumbent firm that has more information about the market demand than the regulator and can use this advantage to persuade the regulator to make entry more difficult. With the first regulatory policy the regulator uses the incumbent price pre-regulation to get information about the demand. With the second regulatory policy the regulator designs a mechanism to motivate the incumbent firm to price truthfully. We conclude that for a wide range ofsituations, social welfare is strictly higher with the more active regulatory policy.
Publisher
Hitotsubashi University
Issued Date
2012-06
Language
English(eng)
Resource Type
departmental bulletin paper
Version Type
VoR
selfDOI
10.15057/23147
ISSN
0018-280x
NCID
AA00207547
Source Title
Hitotsubashi Journal of Economics
Volume Number
53
Issue Number
1
Page Start
71
Page End
84
Appears in Collections
Vol. 53, no. 1 (Jun. 2012)
URL
https://hdl.handle.net/10086/23147