Incomplete contracting and price regulation

This paper deals with price regulation of a monopolistic distribution grid which sells a license to some retailer. The regulator aims at attaining efficient sale of the license and efficient relationship-specific investments of the agents. The first best can be attained by a sequential regulatory mechanism which gives the seller an option to grant the license but allows the buyer to make counteroffers. This sequential mechanism runs counter to the usual price-cap idea since possible upward but never downward renegotiation of the regulated price is the vehicle to attain the first best. (orig.)SIGLEAvailable from TIB Hannover: RO 2708(593) / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekDEGerman