This paper deals with price--cap regulation of a monopolistic distribution grid which sells a license to some retailer. The sale of the license is a long--term incomplete contract. Both the grid and the licensee engage in relationship--specific investments before the value and costs of the...

Target-cost pricing has been a widely applied formula in defence contracting. If this type of pricing arrangement is chosen, the seller's ex-post profit consists of a fixed payment plus some share of the cost overrun, that is the difference between an ex--ante agreed estimation of the production...

This paper first presents various simple regulatory mechanisms, in particular Vogelsang and Finsinger's iterative mechanism and Shleifer's yardstick Regulation. Unfortunately, in practical applications of these simple mechanisms the regulated utility will be able to dodge the regulator's...

This paper deals with double lobbying: several bureaucrats participate in joint lobbying to get a high total departmental budget, but they also engage in antagonistic lobbying to reap as high a share of the total budget as possible. The antagonistic lobbying constitutes a contest among the...

This paper investigates a procurement relationship between a welfare-oriented government and a private supplier. The agents face several versions of the trading good which differ in quality and production costs, and the differences between those items are undescribable ex ante. In presence of...

This paper deals with a privatized firm facing potential market entry. The firm has inherited excess capacity from its public past. The players have asymmetric costs. Only the entrant must install new capacity, which incurs positive capacity installation costs. The paper considers the subgame...

The comment refers to a paper by Grout published in the ECONOMIC JOURNAL (1988). Grout's paper is concerned with the impact of employee shares on the net income of the employees. Analysing a specific game he concludes that "workers in aggregate do not gain from share ownership". This conclusion...

In public procurement a temporal separation of award and actual contracting can frequently be observed. In this paper we give an explanation for this institutional setting. For incomplete procurement contracts we show that such a separation may increase efficiency. We show that efficiency can be...

This paper presents an analysis of a recently invented new form of price regulation. An index of prices of monopolistically supplied goods must never exceed the retail price index minus X. The main results of the chapter are as follows: (i) If the constant X is politically chosen, price-cap...