Journal article
Can Poorly Informed Regulators Hinder Competition?
Environmental & resource economics, Vol.61(3), pp.433-461
07/01/2015
Abstract
This paper considers an entry-deterrence game in which environmental policy is set without perfectly observing the incumbent firm's costs. We investigate if regulators, who can have an informational advantage relative to the potential entrant, support entry-deterring practices. The paper demonstrates that, while entry-deterring equilibria only emerge under restrictive conditions when the regulator is perfectly informed, these equilibria arise under larger settings as he becomes uninformed. Furthermore, we show that the regulator is willing to support the incumbent's entry-deterring practices regardless of his degree of information if entry costs are sufficiently high. However, when entry costs are lower, the regulator only sustains this type of practices if he is poorly informed.
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Details
- Title
- Can Poorly Informed Regulators Hinder Competition?
- Creators
- Ana Espinola-Arredondo - Washington State UniversityFelix Munoz-Garcia - Washington State University
- Publication Details
- Environmental & resource economics, Vol.61(3), pp.433-461
- Academic Unit
- Economic Sciences, School of
- Publisher
- Springer Nature
- Number of pages
- 29
- Identifiers
- 99900971133101842
- Language
- English
- Resource Type
- Journal article