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Regulation versus Regulated Monopolization of a Cournot Oligopoly with Unknown Costs

Saglam, Ismail (2016): Regulation versus Regulated Monopolization of a Cournot Oligopoly with Unknown Costs.

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Abstract

This paper studies whether a Cournot oligopoly with unknown costs should be left unregulated, or regulated according to the optimal mechanism of Gradstein (1995), or first monopolized and then regulated according to the optimal mechanism of Baron and Myerson (1982). We show that the answer to this question depends on the number of the oligopolistic firms and the size of their fixed costs, as well as on the weight of the producer welfare in the social objective function.

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