Bottleneck Access with Structural Regulation and Endogenous Competition

Luciano Greco and Fabio Manenti ()

No 162, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: In a simple model of network industry, where an upstream monopolist provides an essential input for downstream service supply, we analyze the competitive settings arising in the downstream market under alternative regulatory frameworks; we combine structural (i.e. vertical integration, functional/ownership separation) and conduct (discriminatory and nondiscriminatory access) regulatory remedies. Downstream firms are characterized by different levels of cost efficiency in the provision of the service. We show that the degree of heterogeneity in firmsÕ cost efficiency is critical to the determination of the amount of competition that emerges in the downstream market, and of the efficiency of the industry. We show that i) when downstream firms are significantly heterogenous, discriminatory access fees may be socially desirable and ii) vertical integration is always socially preferable.

Keywords: Vertical Integration; Functional Separation; Ownership Separation; Regulation; Discriminatory Access Fees. (search for similar items in EconPapers)
JEL-codes: L13 L22 L44 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013-05
New Economics Papers: this item is included in nep-com and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0162

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