Gautier, Axel; Mitra, Manipushpak - University of Bonn, Germany - 2002
In this paper we consider the problem of financing infrastructure when the regulator faces a budget constraint. The … property is that the mechanism is a third best one. In other words, as long as the budget-constraint is binding, the optimal … output is strictly lower than the second best output for any given type. Finally, if the budget constraint is too strong …