Başlık (İngilizce): Cost Information Transmission in Regulation
Sunumu Yapan: Shourjo Chakravorty
Bağlı Bulunduğu Kurum: İstanbul Teknik Üniversitesi, Ekonomi Bölümü
Tarih: 4 Ekim 2019
İngilizce Özet: In rate-of-return regulation, a firm applies to the regulator for a revenue increase that is supposed to reflect its increased costs. I prove that for a risk-neutral firm, the only equilibrium that can exist is the one in which there is no cost information transmission from the firm to the regulator. I argue that this equilibrium is consistent with empirical results from Florida that there seems to be no association between the firm’s allowed-revenue increase and the change in its future operating cost.