Year: 2004
Type: article
Abstract: This article studies a simple procurement problem (Laffont and Tirole,1993) where the regulator faces a cash‐in‐advance constraint. The introduction of such a constraint not only reduces the amount of public good provided but also limits the instruments available to the regulator. The wealth constraint could change the optimal regulatory contract from a two‐part tariff, where the quantities produced depend on the firm’s cost, to a less efficient fixed fee where the firm produces the same quantity whatever its cost.
Author: Axel Gautier
Institutions: University of Liège, UCLouvain Saint-Louis Brussels, UCLouvain
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2023733671