Regulation of Duopoly: Managed Competition vs Regulated Monopolies

Cost Padding in Regulated Monopolies

In this paper we consider a regulated monopoly that can pad its costs to increase its cost reimbursement. Even while padding is inefficient the optimal incentive scheme tolerates some padding of costs to reduce the information rents paid to low cost types. It is shown that high cost firms pad costs more than low cost firms. We also show that cost padding moves pricing away from Ramsay optimal p...

Retailer- vs. Vendor-Managed Inventory and Brand Competition

Product and Price Competition in a Duopoly

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A Dynamic Pricing Model under Duopoly Competition

We introduce and analyze a multi-period, finite horizon, no-replenishment, dynamic pricing model under duopoly competition between two retailers who sell an identical good. According to our duopoly competition model, a single consumer, whose valuation is uniformly distributed on [0,1], visits only one of the two retailers in each period. If the price posted by the retailer visited by the consum...

Regulation of Monopolies A Randomized Approach *)

Two formal models are proposed to describe the gains of randomizing the regulation and price control of monopolies. In the first model, a monopolist faces a nonzero probability of being regulated by the authorities due its pricing policy. This leads to a self-regulation. Threat of regulation induces monopoly to pay a risk premium to consumers in a form of reduced product price. The analytical s...