Three essays on regulation, public finance, and game theory.

摘要

This dissertation addresses three issues. The first one deals with whether regulation hinders innovation in regulated industries like telecommunications and electricity. With experience, regulated monopolists learn to employ cost reducing innovations. We characterize the optimal regulation of an innovating monopolist with unknown costs. Regulatory policy is designed to minimize current costs of service, while encouraging development of cost saving innovations. Following practice, regulated prices change periodically as the observed operating conditions of the monopolist vary. We find under optimal regulation (a) innovation is encouraged by light handed regulation allowing the monopolist to earn greater information rents while providing greater service, (b) innovation occurs in the absence of long term agreements when private information is persistent, and (c) innovation is more rapid in a durable franchise, and the regulator prefers durable franchises for exploiting learning economies.; The second issue is why charities or fundraisers commonly announce donations as they accrue. Doing so induces donors to play a sequential-move rather than simultaneous-move game. We examine the conditions under which a charity prefers such sequential play. It is known that if donors only value contributions through their effect on the total provision of a public good, then the charity will not announce contributions sequentially. However, with more general utility functions that include additional effects such as warm-glow or snob appeal, the charity may benefit from announcing contributions.; In the last part, we characterize the equilibrium outcomes of such games with two distinct features: (1) Agents have multiple opportunities to respond to each other before the payoffs are received, and (2) they can do so only by accumulating their strategy variables over time. Our characterization depends only on agents' reaction functions, one-shot Cournot-Nash and Stackelberg outcomes in the textbook sense. We show that having more than two opportunities to respond would not change the equilibrium outcomes and provide conditions for which equilibrium outcomes would be the same as the one-shot Cournot-Nash outcome.