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Émeric HENRY (Sciences Po) – "Approval Regulation, Liability and Withdrawal: Balancing Ex Ante Experimentation and Ex Post Learning" joint with Marco Loseto and Marc Ottaviani
The Microeconomics Seminar: Every Wednesday at 12:15 pm.
Time: 12:15 pm – 1:30 pm
Date: 2nd of May 2018
Place: Room 3001.
Émeric HENRY (Sciences Po) – “Approval Regulation, Liability and Withdrawal: Balancing Ex Ante Experimentation and Ex Post Learning” joint with Marco Loseto and Marco Ottaviani
Abstract: Dynamic adoption policies of activities with uncertain returns are characterized by three key decisions: in the ex ante experimentation phase, the decisions when to abandon experimentation and when to introduce to market; in the ex post learning phase, the decision when to withdraw following the accumulation of bad news. In a tractable continuous-time model, we study the optimal mix of the three instruments regulators employ to align the private incentives of firms: ex ante approval regulation, ex post withdrawal regulation, and liability. Our results can rationalize the large array of regulatory environments observed across applications ranging from product safety to patent protection.
Organizers: Marie-Laure Allain, Pierre Boyer, Laurent Linnemer & Morgane Cure (CREST)