Abstract
The Japanese regulatory authority has introduced a new hybrid regulation that combines a fixed-price contract with ex ante yardstick inspection for local (public utility) gas distribution. The latter compares a firm's reported costs with those of 'similar' firms, and penalizes high-cost firms. We infer the effect of yardstick on information revelation by comparing the actual welfare level with the hypothetical full-information welfare level. Our results suggest that only the very first inspection was effective in reducing firms' incentive to report higher costs.
| Original language | English |
|---|---|
| Pages (from-to) | 313-338 |
| Number of pages | 26 |
| Journal | Review of Industrial Organization |
| Volume | 40 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2012 Jun |
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Keywords
- Hidden information
- Incentive regulation
- Yardstick competition
ASJC Scopus subject areas
- Economics and Econometrics
- Management of Technology and Innovation
- Strategy and Management
- Organizational Behavior and Human Resource Management
Cite this
Yardstick Competition to Elicit Private Information : An Empirical Analysis. / Suzuki, Ayako.
In: Review of Industrial Organization, Vol. 40, No. 4, 06.2012, p. 313-338.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Yardstick Competition to Elicit Private Information
T2 - An Empirical Analysis
AU - Suzuki, Ayako
PY - 2012/6
Y1 - 2012/6
N2 - The Japanese regulatory authority has introduced a new hybrid regulation that combines a fixed-price contract with ex ante yardstick inspection for local (public utility) gas distribution. The latter compares a firm's reported costs with those of 'similar' firms, and penalizes high-cost firms. We infer the effect of yardstick on information revelation by comparing the actual welfare level with the hypothetical full-information welfare level. Our results suggest that only the very first inspection was effective in reducing firms' incentive to report higher costs.
AB - The Japanese regulatory authority has introduced a new hybrid regulation that combines a fixed-price contract with ex ante yardstick inspection for local (public utility) gas distribution. The latter compares a firm's reported costs with those of 'similar' firms, and penalizes high-cost firms. We infer the effect of yardstick on information revelation by comparing the actual welfare level with the hypothetical full-information welfare level. Our results suggest that only the very first inspection was effective in reducing firms' incentive to report higher costs.
KW - Hidden information
KW - Incentive regulation
KW - Yardstick competition
UR - http://www.scopus.com/inward/record.url?scp=84860918436&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84860918436&partnerID=8YFLogxK
U2 - 10.1007/s11151-011-9332-6
DO - 10.1007/s11151-011-9332-6
M3 - Article
AN - SCOPUS:84860918436
VL - 40
SP - 313
EP - 338
JO - Review of Industrial Organization
JF - Review of Industrial Organization
SN - 0889-938X
IS - 4
ER -