  We consider the problem of how to regulate an oligopoly when firms have
private information about their costs. In the environment, consumers make
discrete choices over goods, and minimal structure is placed on the manner in
which firms compete. In the optimal regulatory policy, the regulator need only
solicit prices from firms, and based on those prices, charge them taxes or give
them subsidies, and impose on each firm a ``yardstick'' price cap that depends
on the posted prices of competing firms.
