Regulating a Monopolist with unknown costs and unknown quality capacity

We study the regulation of a firm with unknown demand and cost information. In contrast to previous studies, we assume demand is influenced by a quality choice, and the firm has private information about its quality capacity in addition to its cost. Under natural conditions, asymmetric information about the quality capacity is irrelevant. The optimal pricing is weakly above marginal costs for all types and no type is excluded.

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Year of publication:	2008
Authors:	Blackorby, Charles ; Szalay, Dezsö
Institutions:	Department of Economics, University of Warwick
Subject:	Asymmetric Information \| Multi-dimensional Screening \| Regulation

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Series:	The Warwick Economics Research Paper Series (TWERPS).
Type of publication:	Book / Working Paper
Language:	English
Notes:	42 pages
Classification:	D82 - Asymmetric and Private Information ; L21 - Business Objectives of the Firm
Source:	RePEc - Research Papers in Economics

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