A Re-Examination of Yardstick Competition

UCSD Economics Discussion Paper 97-25

19 Pages Posted: 16 Apr 1998

See all articles by Joel Sobel

Joel Sobel

University of California at San Diego

Date Written: October 1997

Abstract

I observe that yardstick competition does not assist a regulator when lump-sum transfers are not costly and the regulator does not care about the distribution of income. Yardstick competition discourages investment that would make efficient operation possible. I characterize optimal regulatory schemes in a simple model and demonstrate that it is generally optimal to limit the amount of information available to the regulator.

JEL Classification: L51

Suggested Citation

Sobel, Joel, A Re-Examination of Yardstick Competition (October 1997). UCSD Economics Discussion Paper 97-25, Available at SSRN: https://ssrn.com/abstract=76461 or http://dx.doi.org/10.2139/ssrn.76461

Joel Sobel (Contact Author)

University of California at San Diego ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
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