Regulation and third-party discrimination in vertically related markets: The case of German electricity

Gert Brunekreeft

No 74 [rev.], Discussion Papers from University of Freiburg, Institute for Transport Economics and Regional Policy

Abstract: This paper explores the relation between the regulation of monopolistic upstream prices and the incentives of a vertically integrated input monopolist to discriminate third parties on the downstream market. Currently, this is an issue in network industries like telecommunications, electricity and railways and has sparked off a controversy in the literature. The paper examines how the incentives to discriminate depend on the level of the upstream prices, the potential competitiveness of the downstream market and the efficiency of the competitors as compared to the integrated firm's downstream subsidiary. The insights are applied to the electricity supply industry in Germany.

Keywords: regulation; discrimination; vertical integration; electricity (search for similar items in EconPapers)
JEL-codes: L42 L51 L94 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (7)

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