On the dynamic optimality of yardstick regulation

Author:

Bisceglia Michele,Cellini Roberto,Grilli LucaORCID

Abstract

AbstractThis paper proposes a generalization of Shleifer’s (RAND J Econ 16:319–327, 1985) model of yardstick competition to a dynamic framework. In a differential game setting, we show that the yardstick mechanism effectively replicates the first-best solution if players adopt open-loop behaviour rules and are symmetric at the initial time; in the absence of initial symmetry, the social efficiency is reached only in the asymptotic steady state. On the contrary, if players adopt Markovian behaviour rules, then the yardstick pricing rule cannot achieve the first-best solution along the equilibrium path of any Markov Perfect Nash Equilibrium.

Publisher

Springer Science and Business Media LLC

Subject

Management Science and Operations Research,General Decision Sciences

Cited by 3 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. Reform, Not Revolution, is What is Needed Now for Yardstick Competition;Review of Network Economics;2024-06-01

2. Yardstick Competition Regulation for Incentive Mechanisms in Federated Learning: Balancing Cost Optimization and Fairness;2023 21st International Symposium on Modeling and Optimization in Mobile, Ad Hoc, and Wireless Networks (WiOpt);2023-08-24

3. Optimal Policymaking under Yardstick Vote: An Experimental Study;Games;2022-05-30

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