In this article, we study the optimal regulation of a dominant firm when an unregulated firm actively competes. Generally, the existence of an active rival imposes new and binding constraints on regulatory problems. We characterize optimal policies both when demands are known (complete...

The author analyzes renegotiation in a hidden action principal-agent model. Contract renegotiation offers are made by the agent. A refinement is imposed on the principal's beliefs: if precisely one action is optimal with respect to both the principal's and the agent's contracts, the principal...

We study the interaction between a public sector and a private sector in the provision of a private good. Under a limited budget, the public supplier uses a rationing policy. A private ?rm may supply the good to those consumers who are rationed by the public system. Consumers have di¤erent...

A model of vertical integration is studied. Upstream firms sell differentiated inputs; downstream firms bundle them to make final products. Downstream products are sold as option contracts, which allow consumers to choose from a set of commodities at predetermined prices. The model is...

I reconsider the implementation of efficient cost and quality efforts when health-care providers may refuse services to consumers, and introduce a mechanism that is a combination of prospective payment and cost reimbursement. Conditions are derived for the prospective payment level and the...

This paper introduces a theory of network incentives in managed health care. Participation in the plan's network confers an economic benefit on providers; in exchange, the plan expects compliance with its protocols. The network sets a target for the number of outpatient visits in an episode of...

If an illness is not contractible, then even partially insured consumers demand treatment for it when the benefit is less than the cost, a condition known as moral hazard. Traditional health insurance, which controls moral hazard with copayments (demand management), can result in either a...

You must be very excited, ready to start your Ph.D. program here in Bergen. To many of you this will be an important milestone. It should be. Undertaking a Ph.D. study is not a trivial matter, and I hope that you do take this seriously. I have been asked to address you on matters concerning...

This paper compares the cost and quality incentive effects of cost reimbursement and prospective payment systems in the health industry. When a provider cannot refuse patients who require high treatment costs or discriminate patients by qualities, optimally designed prospective payments can...