Review of Economic Design

, Volume 7, Issue 4, pp 443–463 | Cite as

Implementing efficient market structure

  • Veronika Grimm
  • Frank Riedel
  • Elmar Wolfstetter
Original paper

Abstract. This article studies the design of optimal mechanisms to regulate entry in natural oligopoly markets, assuming the regulator is unable to control the behavior of firms once they are in the market. We adapt the Clarke–Groves mechanism, characterize the optimal mechanism that maximizes the weighted sum of expected social surplus and expected tax revenue, and show that these mechanisms avoid budget deficits and prevent excessive entry.

JEL classification: D43, D44, D45, H21, L13 
Key words: Mechanism design, auctions, entry, regulation, optimal taxation 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • Veronika Grimm
    • 1
  • Frank Riedel
    • 1
  • Elmar Wolfstetter
    • 1
  1. 1.Humboldt-Universität zu Berlin, Institut für Wirtschaftstheorie I, Spandauer Str. 1, 10178 Berlin Germany (e-mail: {grimm/riedel/wolf}@wiwi.hu-berlin.de) DE

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