Eberhard Feess, Michael Paust

Implementing Efficient Market Structures: The Role of Information Transmission

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Jahrgang 71 () / Heft 2, S. 240-277 (38)

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We extend the literature on the implementation of efficient market structures to private information on marginal costs. We consider a setting with an incumbent and two potential entrants whose costs can be either high or low. By setting the license fee appropriately, the regulator can induce truth-telling by the potential entrants, and can then implement the welfare-maximizing market structure. We distinguish between a disclosure policy, where the regulator reveals the types of entrants before the market game is played, and a concealment policy, where he keeps silent about types. While the concealment policy is predominant in practice, we show that the disclosure policy leads to higher social welfare.

Eberhard Feess Keine aktuellen Daten verfügbar.

Michael Paust Keine aktuellen Daten verfügbar.