Optimal regulatory control of early contract termination

Evatt, G.W and Johnson, P and Duck, P (2013) Optimal regulatory control of early contract termination. IMA Journal of Management Mathematics.

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We present a quantitative method to find jointly optimal strategies for an industry regulator and a firm, who operate under exogenous uncertainty. The firm controls its operating policy in order to maximize its expected future profits, whilst taking account of regulatory fines. The regulator aims to control the probability of the firm terminating production, by imposing a closure fine which is as low as possible, while achieving the required reduction in probability. Our method determines the level of fine which establishes a Nash equilibrium in these nonzero-sum games, under uncertainty.

Item Type: Article
Subjects: MSC 2010, the AMS's Mathematics Subject Classification > 91 Game theory, economics, social and behavioral sciences
Depositing User: Dr Geoff Evatt
Date Deposited: 28 May 2013
Last Modified: 20 Oct 2017 14:13
URI: https://eprints.maths.manchester.ac.uk/id/eprint/1987

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