Optimal Regulation in the Presence of Reputation Concerns

• 成果类型: Article
• 署名作者: Atkeson, Andrew; Hellwig, Christian; Ordonez, Guillermo
• 署名单位: University of California System; University of California Los Angeles; National Bureau of Economic Research; Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics; Centre for Economic Policy Research - UK; University of Pennsylvania
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qju034
• 发表日期: 2015
• 页码: 415-464
• 关键词: Moral hazard; QUALITY; MARKET; POLICY; entry; PRODUCTIVITY; equilibrium; selection; returns; lemons

摘要

In all markets, firms go through a process of creative destruction: entry, random growth, and exit. In many of these markets there are also regulations that restrict entry, possibly distorting this process. We study the public interest rationale for entry taxes in a general equilibrium model with free entry and exit of firms in which firm dynamics are driven by reputation concerns. In our model firms can produce high-quality output by making a costly but efficient initial unobservable investment. If buyers never learn about this investment, an extreme lemons problem develops, no firm invests, and the market shuts down. Learning introduces reputation incentives such that a fraction of entrants do invest. We show that if the market operates with spot prices, entry taxes always enhance the role of reputation to induce investment, improving welfare despite the impact of these taxes on equilibrium prices and total production. JEL Codes: D21, D82, L15, L51.