Regulation at home, competition abroad: a theoretical framework∗
نویسندگان
چکیده
We analyze the design of the optimal price for a firm which is a monopolist at home but competes abroad against foreign firms. The price rule depends on whethere there are economies or diseconomies of scope between home and foreign output and on the relative weights the regulator assigns to foreignand home-earned profits. Informational asymmetry introduces a distortion in the price rule, which may be amplified by the existence of a competitive foreign market. Allowing the firm to compete abroad does not necessarily harm domestic consumers, and the price distortion is typically amplified as the number of competitors increases, so that the firm may also gain by stronger foreign competition.
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تاریخ انتشار 2004