Th3.6: Asymmetric Information Flashcards
1
Q
What is asymmetric information in this case?
A
where regulatory bodies have to use information provided to them by the industries when setting price targets
2
Q
It is in the industry’s best interest to maximise their profits and so…
A
may provide inaccurate or limited information, meaning regulators are unable to set correct targets, prices e.t.c
3
Q
As a result, when may government failure occur?
A
if regulation such as RPI-X or quality standards are not set correctly - the government will be unable to regulate the companies accurately
