{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,12]],"date-time":"2025-10-12T04:33:40Z","timestamp":1760243620318,"version":"build-2065373602"},"reference-count":11,"publisher":"MDPI AG","issue":"3","license":[{"start":{"date-parts":[[2013,9,16]],"date-time":"2013-09-16T00:00:00Z","timestamp":1379289600000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/3.0\/"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Games"],"abstract":"<jats:p>We study the optimal regulation of a monopolist when intrinsic efficiency (intrinsic cost) and empire building tendency (marginal utility of output) are private information, but actual cost (the difference between intrinsic cost and effort level) is observable. This is a problem of multidimensional screening with complementary activities. Results are not only driven by the prior probabilities of the four possible types, but also by the relative magnitude of the uncertainty along the two dimensions of private information. If the marginal utility of output varies much more (less) across managers than the intrinsic marginal cost, there is empire building (efficiency) dominance. In that case, an inefficient empire builder produces more (less) and at lower (higher) marginal cost than an efficient money-seeker. It is only when variabilities are similar that there may be the natural ranking of activities (empire builders produce more, while efficient managers produce at a lower cost).<\/jats:p>","DOI":"10.3390\/g4030532","type":"journal-article","created":{"date-parts":[[2013,9,16]],"date-time":"2013-09-16T11:20:11Z","timestamp":1379330411000},"page":"532-560","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":0,"title":["Multidimensional Screening with Complementary Activities: Regulating a Monopolist with Unknown Cost and Unknown Preference for Empire Building"],"prefix":"10.3390","volume":"4","author":[{"given":"Ana","family":"Borges","sequence":"first","affiliation":[{"name":"Universidade Lus\u00edada Porto, Rua Dr. Lopo de Carvalho, 4369-006 Porto, Portugal"},{"name":"CEF.UP, Universidade do Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal"}]},{"given":"Didier","family":"Laussel","sequence":"additional","affiliation":[{"name":"Aix-Marseille Universit\u00e9, GREQAM, CNRS and EHESS, Ch\u00e2teau Lafarge, Route des Milles, 13290Les Milles, France"}]},{"given":"Jo\u00e3o","family":"Correia-da-Silva","sequence":"additional","affiliation":[{"name":"CEF.UP, Universidade do Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal"},{"name":"Faculdade de Economia, Universidade do Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal"}]}],"member":"1968","published-online":{"date-parts":[[2013,9,16]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"959","DOI":"10.1016\/S0014-2921(98)00108-1","article-title":"Multidimensional screening: A user\u2019s guide","volume":"43","author":"Armstrong","year":"1999","journal-title":"Eur. Econ. Rev."},{"key":"ref_2","unstructured":"Basov, S. (2005). Studies in Economic Theory, Springer."},{"key":"ref_3","doi-asserted-by":"crossref","first-page":"614","DOI":"10.1086\/261392","article-title":"Using cost observation to regulate firms","volume":"94","author":"Laffont","year":"1986","journal-title":"J. Polit. Econ."},{"key":"ref_4","doi-asserted-by":"crossref","first-page":"29","DOI":"10.1111\/j.1467-9957.2010.02224.x","article-title":"Using cost observation to regulate a manager who has a preference for empire building","volume":"79","author":"Borges","year":"2011","journal-title":"Manchester School"},{"key":"ref_5","unstructured":"Niskanen, W.A. (1971). Bureaucracy and the representative government, Aldine Press."},{"key":"ref_6","unstructured":"Donaldson, G. (1984). Managing corporate wealth: The operation of a comprehensive financial goals system, Praeger."},{"key":"ref_7","first-page":"323","article-title":"Agency costs of free cash flow, corporate finance and take-overs","volume":"76","author":"Jensen","year":"1986","journal-title":"Am. Econ. Rev."},{"key":"ref_8","doi-asserted-by":"crossref","first-page":"831","DOI":"10.1111\/j.1540-6261.1993.tb04022.x","article-title":"The modern industrial revolution, exit, and the failure of internal control systems","volume":"48","author":"Jensen","year":"1993","journal-title":"J. Finance"},{"key":"ref_9","unstructured":"Borges, A.P., Correia-da-Silva, J., and Laussel, D. Regulating a manager whose empire building preferences are private information. J. Econ., forthcoming."},{"key":"ref_10","doi-asserted-by":"crossref","first-page":"251","DOI":"10.1006\/reec.2002.0280","article-title":"Two-dimensional screening: a case of monopoly regulation","volume":"56","author":"Brighi","year":"2002","journal-title":"Research in Econ."},{"key":"ref_11","first-page":"150","article-title":"The economics of multidimensional screening","volume":"35","author":"Rochet","year":"2003","journal-title":"Econometric Society Monographs"}],"container-title":["Games"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/www.mdpi.com\/2073-4336\/4\/3\/532\/pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,11]],"date-time":"2025-10-11T21:49:20Z","timestamp":1760219360000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.mdpi.com\/2073-4336\/4\/3\/532"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2013,9,16]]},"references-count":11,"journal-issue":{"issue":"3","published-online":{"date-parts":[[2013,9]]}},"alternative-id":["g4030532"],"URL":"https:\/\/doi.org\/10.3390\/g4030532","relation":{},"ISSN":["2073-4336"],"issn-type":[{"type":"electronic","value":"2073-4336"}],"subject":[],"published":{"date-parts":[[2013,9,16]]}}}