A Theory of Yardstick Competition Export

@article{citeulike:2006229, abstract = {In the typical regulatory scheme a franchised monopoly has little incentive to reduce costs. This article proposes a mechanism in which the price the regulated firm receives depends on the costs of identical firms. In equilibrium each firm chooses a socially efficient level of cost reduction. The mechanism generalizes to cover heterogeneous firms with observable differences. Medicare's prospective reimbursement of hospitals by using diagnostically related groups is a scheme very similar to the one outlined here.}, author = {Shleifer, Andrei}, citeulike-article-id = {2006229}, citeulike-linkout-0 = {http://dx.doi.org/10.2307/2555560}, citeulike-linkout-1 = {http://www.jstor.org/stable/2555560}, doi = {10.2307/2555560}, journal = {The RAND Journal of Economics}, keywords = {industrial\_organization, microeconomic\_theory}, number = {3}, pages = {319--327}, posted-at = {2008-12-19 16:08:05}, priority = {4}, title = {A Theory of Yardstick Competition}, url = {http://dx.doi.org/10.2307/2555560}, volume = {16}, year = {1985} }

TY - JOUR ID - citeulike:2006229 L3 - citeulike-article-id:2006229 N2 - In the typical regulatory scheme a franchised monopoly has little incentive to reduce costs. This article proposes a mechanism in which the price the regulated firm receives depends on the costs of identical firms. In equilibrium each firm chooses a socially efficient level of cost reduction. The mechanism generalizes to cover heterogeneous firms with observable differences. Medicare's prospective reimbursement of hospitals by using diagnostically related groups is a scheme very similar to the one outlined here. IS - 3 JF - The RAND Journal of Economics EP - 327 TI - A Theory of Yardstick Competition VL - 16 SP - 319 KW - industrial_organization KW - microeconomic_theory AU - Shleifer, Andrei PY - 1985/// UR - http://dx.doi.org/10.2307/2555560 ER -