Regulating a Monopolist with Unknown Demand
Abstract
Optimal regulatory policy is derived in a setting where the firm has better knowledge
of demand than the regulator. When marginal production costs increase with output,
the regulator can induce the firm to use its private information entirely in the social
interest. When marginal costs decline with output, however, the regulator is unable
to derive any benefit from the firm's superior knowledge, and a single price is established
that is invariant to demand.
Type
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https://hdl.handle.net/10161/2092Collections
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Tracy R. Lewis
Walter M. Upchurch, Jr. Distinguished Professor of Business Administration
Tracy Lewis is a Professor Emeritus of Business Administration at the Fuqua School
of Business at Duke University, where he held the Black Chair in Economics. Professor
Lewis founded the Innovation Center at the University. Prior to joining the Duke University
Faculty in 2003, he served on the faculties at the University of Florida, at the California
Institute of Technology, the University of British Columbia, and the University of
California, Davis. Aside from academic employment, he has also h
This author no longer has a Scholars@Duke profile, so the information shown here reflects
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