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...

This paper deals with a polling game on a graph. Initially, each vertex is colored white or black. At each round, each vertex is colored by the color shared by the majority of vertices in its neighborhood. (All recolorings are done simultaneously). We say that a set W0 of vertices is a dynamic monopoly or dynamo if starting the game with the vertices ofW0 colored white, the entire system is whi...

Irreversible dynamic monopolies were already defined and widely studied in the literature for undirected graphs. They are arising from formulation of the irreversible spread of influence such as disease, opinion, adaptation of a new product, etc., in social networks, where the influence between any two individuals is assumed to be bilateral or reciprocal. But in many phenomena, the influence in...

This paper analyzes Perfect Bayesian Equilibria in dynamic monopolies with stochastic demand. It examines sequential take-it-or-leave-it o®ers and sequential auctions. It is shown that equilibria in the former mechanism trade-o® allocative e±ciency and competing buyers' opportunities to acquire an item to be sold, permitting prices and expected revenue above those of one-shot o®ers and sequenti...

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...