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| Author: | Wang, G.H. |
| Title: | Regulating an oligopoly with unknown costs |
| Journal: | International Journal of Industrial Organization
2000 : JUL, VOL. 18:5, p. 813-825 |
| Index terms: | Oligopoly Regulations Cost control Economic theory Models |
| Language: | eng |
| Abstract: | This paper examines the problem of planner regulating an oligopoly with unknown costs. A complete characterization of the optimal mechanism is provided which takes the following simple form: firm(s) which report low costs produce together the first best output corresponding to this low cost and firm(s) which report high costs produce nothing. When all firms report high costs, only the ex-ante least efficient firm produces the entire output and all the other firms produce nothing. It is shown that under mild conditions, as the number of firms increases, the planner attains the same welfare level as if he had complete information of low cost. |
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