cost control and rent extraction, Management Theories

Think of a state where the regulator is uncertain as to the true cost of the regulated firm. Also, the firm (the firm's management) can work harder or less hard to control costs; if it doesn't work hard its costs will be higher. There is a subjective cost to work hard to keep costs down, e.g., due to  management will have to fire a lot of staff and it will have to introduce new work routines that will not be popular. This is a real & substantial cost, but it doesn't show up in the accounts, it cannot be verified and thus it cannot be compensated explicitly by the regulator.

 

a) Discuss the trade-off the regulator has to make among cost control and rent extraction. What "family" of regulatory methods will achieve cost control, what "family" of methods will achieve rent extraction? Can the two methods be combined?

b) Under a consumer-welfare standard, try to construct two instances where one of the 2 methods is preferred in one example and the other in the other example. Try to link your two examples to real-world situations!

 

 

Posted Date: 3/19/2013 4:10:09 AM | Location : United States







Related Discussions:- cost control and rent extraction, Assignment Help, Ask Question on cost control and rent extraction, Get Answer, Expert's Help, cost control and rent extraction Discussions

Write discussion on cost control and rent extraction
Your posts are moderated
Related Questions
Do we really need a change in the way the IS function is structured? Are the necessary changes just minor modifications to accommodate normal growth and computer usage?

2. From the following cost, production and sales data of Decors Motor Ltd., prepare comparative income statement for three years under (i) absorption costing method, and (ii) margi

Critical analysis of a small business MIS

discuss the extended marketing mix in relation to the restaurant


evolution of the operation management and production

The average number of tools repaired per day has been decreased up to 50 in 2015/16 financial year compared to year 2014/15 which was at 80 machines per day. Management needs to in

CRM methods that go beyond technology, helping companies attain and retain customers, build lasting relationships, improve loyalty, gain insight, and execute customer-focused metho

essential features of a sound capital structures

Q. What you mean by organizational Change? Making modifications in the functions along with practices of an organization is known as organizational change. Change results emplo