Regulation by Incentives, Regulation of the Incentives in Urban Policies

Investment incentives and airport regulation

Arguments for and against the proposition that price-capped privatised utilities have an incentive to under-invest are examined in the context of airport regulation. The general proposition finds support from generic arguments associated with the hold-up problem and with ex-post opportunism. Three counter arguments are then considered: that under-investment imposes additional internal costs on ...

Economic Incentives for Environmental Regulation

This paper provides a brief summary of the theory and the reality of economic-incentive approaches to environmental regulation. The paper begins with a derivation of the necessary and sufficient condition for a policy instrument to be cost effective, namely that the instrument induces all sources to abate emissions at the same marginal cost. Subsequent sections introduce economic-incentive poli...

Executive Compensation, Supervisory Incentives, and Banking Regulation

This paper analyzes the optimal design of banking regulation when three layers of agency conflicts between society and banks, society and supervisors, and bank owners and managers are present. We argue that regulatory rules, supervisory incentives, and managerial compensation form an interdependent nexus. Since managerial incentives reveal information about banks’ operating policies comprehensi...

Parallel trade, price regulation, and investment incentives

We study the case where parallel trade (PT) stems from government price controls in a foreign country. We remove the presumption that PT blunts dynamic efficiency if the government has partial commitment ability. We model the R&D firm’s option to serve the foreign country, and find that PT may improve quality, depending on preferences for quality. Improving quality may be a sufficient condition...

Regulation and banks ’ incentives to control risk by Arnoud