Abstract
Certain regulators of economic activity, like utility regulators and government procurement officers, typically serve for relatively short periods of time. The authors consider how to best motivate long-term investment in the presence of short-lived regulators. A firm's investment decision is overseen by one regulator. Whether the investment is ultimately adopted is determined by a second, distinct regulator. Each regulator is concerned with the welfare of its own contemporary population. Transfer payments between populations are limited and relevant data cannot be verified by third parties. Underadoption and underinvestment on average result, although overinvestment may also occur under the optimal regulatory charter. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call