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Journal of Regulatory Economics

, Volume 25, Issue 3, pp 223–242 | Cite as

Competition and Regulation in Franchise Bidding

  • Nicola Doni
Article

Abstract

In this work we show that the separation property identified in the franchise bidding literature depends strictly on the hypothesis of coincidence of the regulator's beliefs with those of the competing firms. Nevertheless, in many contexts it is more truthful to hypothesize that the regulator's information is vaguer than that of the producers, so we introduce the possibility that the regulator is dealing with a double informational asymmetry as compared to the firms. In this case, the separation property is no longer valid, and the optimal tariff becomes a decreasing function of the degree of competition exercised during the auction.

franchise bidding separation property double asymmetric information 

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Copyright information

© Kluwer Academic Publishers 2004

Authors and Affiliations

  • Nicola Doni
    • 1
  1. 1.Department of EconomicsUniversity of FlorenceFlorenceItaly

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