A Theory of Incentives in Procurement and Regulation
More then just a textbook, A Theory of Incentives in Procurement and Regulation will guide economists' research on regulation for years to come. It makes a difficult and large literature of the new regulatory economics accessible to the average graduate student, while offering insights into the theoretical ideas and stratagems not available elsewhere. Based on their pathbreaking work in the application of principal-agent theory to questions of regulation, Laffont and Tirole develop a...
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Based on their pathbreaking work in the application of principal-agent theory to questions of regulation, Laffont and Tirole develop a synthetic approach, with a particular, though not exclusive, focus on the regulation of natural monopolies such as military contractors, utility companies, and transportation authorities.
ForewordAcknowledgmentsIntroduction1IPrice and Rate-Of-Return Regulation1Cost-Reimbursement Rules532Pricing by a Single-Product Firm With and Without Budget Balance1293Pricing and Incentives in a Multiproduct Firm1654Regulation of Quality211IIProduct Market Competition5Competitive Ramsey Formulas and Access Pricing2476Bypass and Cream Skimming273IIIBidding for Natural Monopoly7Auctioning Incentive Contracts3078Repeated Auctions of Incentive Contracts, Investment, and Bidding Parity341IVThe Dynamics of Regulation9Dynamics Without Commitment and the Ratchet Effect37510Commitment and Renegotiation437VThe Politics of Regulation11Regulatory Capture47512Cost Padding, Auditing, and Collusion51513Cartelization by Regulation53714Auction Design and Favoritism559VIRegulatory Institutions15Regulatory Instruments, Hearings, and Interest Group Monitoring59116Commitment and Political Accountability61917Privatization and Incentives637Conclusion661Review Exercises671Index695
