From commitment to non-commitmentallowing type dynamic in Laffont and Tirole's regulation model

Resumo

This paper investigates the introduction of type dynamic in the La ont and Tirole's regulation model. The regulator and the rm are engaged in a two period relationship governed by short-term contracts, where, the regulator observes cost but cannot distinguish how much of the cost is due to e ort on cost reduction or e ciency of rm's technology, named type. There is asymmetric information about the rm's type. Our model is developed in a framework in which the regulator learns with rm's choice in the rst period and uses that information to design the best second period incentive scheme. The regulator is aware of the possibility of changes in types and takes that into account. We show how type dynamic builds a bridge between com- mitment and non-commitment situations. In particular, the possibility of changing types mitigates the \ratchet e ect'. We show that for small degree of type dynamic the equilibrium shows separation and the welfare achived is close to his upper bound (given by the commitment allocation).

Ficha do documento

Tipo

Dissertação

Ano

2013

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/10688

Temas

Economia

Palavras-chave

Dynamic regulationRegulaçãoContratos dinâmicosRatchet effectType dynamicEconomiaComércio - RegulamentaçãoPolítica industrialContratos