Abstract
We analyze a model of repeated franchise bidding for natural monopoly with contestable licensing - a franchisee holds an (exclusive) license to operate a franchise until another firm offers to pay more for it. In a world where quality is observable but not verifiable, the simple regulatory scheme we describe combines market-like incentives with regulatory oversight to generate efficient outcomes.
Original language | English |
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Pages (from-to) | 1-22 |
Number of pages | 22 |
Journal | Contributions to Economic Analysis and Policy |
Volume | 3 |
Issue number | 1 |
DOIs | |
State | Published - 2004 |
Externally published | Yes |
Keywords
- Contestable markets
- Franchise bidding
- Natural monopoly
- Quality
- Regulation