Di-Han Zou

Regulating a Monopolist through Capacity Control

We study monopoly regulation when capacity is contractible but subsequent output is not. A firm privately observes its production cost before installing costly capacity and then choosing output, while the regulator cannot use transfers. We provide sufficient conditions under which a single capacity floor implements an...

A comment on Bagnoli and Bergstrom’s “Log-concave probability and its applications”

Robust Capital Budgeting

We study capital budgeting when a manager privately knows project productivity and her empire-building benefits, while headquarters lacks credible priors. Headquarters minimizes maximum regret relative to informed investment. Without compensation, the optimal policy is a spending cap balancing empire-building overinves...