Regulation

screencasts

  • This video describes what role regulation can play if there is only one firm in the market:

part 1

  • We take a look at a model of a regulated firm, starting with the underlying assumptions and payoffs:

part 2

  • We study first best, the case of no asymmetric information:

part 3

  • Followed by the second best, the case where the regulator does not know how efficient the firm is (asymmetric information):

part 4

  • We simplify the planner’s optimization problem:

part 5

  • We find the optimal cost levels and discuss the competition increasing policy option to threaten the firm to shut down:

part 6

  • In this video we discuss the competition increasing policy option of yardstick competition:

part 7

  • Last, we shortly discuss policy implications of this lecture:

part 8

exercises

In class we discuss question 1 from the exercises.

python

In the python file for this lecture, we consider the graphical approach to regulation: