公共经济学4 管制2公共经济学4 管制2.pdf

Public Sector Economics — MSc Econ 2011 4. Regulation II Paul Schweinzer November 17, 2011. 1 / 14 Public Sector Economics: Lecture 4 Demand uncertainty First-best Second-best Summary Regulation with unknown demand: Reading The canonical application under incomplete information on demand is the price regulation of a monopolist in the electricity or telecommunications industries. A current application is (‘last mile’) broadband provision. The reading for this second part of the regulation block comprises ? Lewis, T.R. and D. Sappington (1988) “Regulating a Monopolist with Unknown Demand,” American Economic Review, 78(5), 986–98. ? Armstrong, M. (1999) “Optimal Regulation with Unknown Demand and Cost Functions,” Journal of Economic Theory, 84(2), 196–215. ? Segal, I. (2003) “Optimal Pricing Mechanisms with Unknown Demand,” American Economic Review, 93(3), 509–29. 2 / 14 Public Sector Economics: Lecture 4 Demand uncertainty First-best Second-best Summary The model Consider the following model due to Lewis Sappington (1988): ? The agent’s output q ∈ [0, ∞) is unobservable. Output q is produced at cost c(q) with ′ ′′ c (q) 0, c (q) 6= 0. ? Price p ∈ [0, pˉ) is contractible and set by the principal. ? Consumer demand D(θ) = q(p, θ) depends on the consumer type θ ∈ [θL, θH ] with density g(θ) interpreted as lowest valuation θL and highest valuation θH . ? Net consumer welfare from the provided quantity q at p is pˉ dS S(p, θ) = q(?p, θ)dp?, with = ?q(p, θ). Zp dp ? There is a type-dependent, lump-sum transfer T (θ) from t