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
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U2 - 10.1007/s11151-011-9332-6
DO - 10.1007/s11151-011-9332-6
M3 - Article
AN - SCOPUS:84860918436
SN - 0889-938X
VL - 40
SP - 313
EP - 338
JO - Review of Industrial Organization
JF - Review of Industrial Organization
IS - 4
ER -