Network Interconnectivity with Regulation and Competition

Jolian McHardy, Michael Reynolds and Stephen Trotter

No 2011020, Working Papers from The University of Sheffield, Department of Economics

Abstract: A simple theoretical network model is introduced to investigate the problem of network interconnection. Prices, profits and welfare are compared under welfare maximisation, network monopoly and network monopoly with competition over one part of the network. Given that inducing actual competition may bring disbenefits such as cost duplication and co-ordination costs, we also explore the possibility of a regulator using the threat of entry on a section of the monopoly network in order to bring about the socially preferred level of interconnectivity. We show that there are feasible parameter values for which such a threat is plausible.

Keywords: Network interconnectivity; monopoly; competition; regulation (search for similar items in EconPapers)
JEL-codes: L14 L33 L50 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011-10
New Economics Papers: this item is included in nep-com, nep-ind, nep-net and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2011020

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