Sequential-Equilibrium Investment by Regulated Firms
研究信息不对称下受监管企业的投资决策，监管者无法事先承诺定价，但可通过观察投资后设定费率，企业投资水平传递的信息缓解了投资不足问题。
We examine the investment decisions of regulated firms in a sequential-equilibrium model under asymmetric information. The regulator is unable to commit to a pricing policy, unlike mechanism-design models, but sets rates after observing the firm's investment. The information conveyed by the firm's investment level alleviates the underinvestment observed under full information with limited regulatory commitment. The equilibrium regulatory strategy can be characterized by a nonlinear rate-of-return schedule. A regulator announcing such a schedule would be able to make a credible commitment.