 Regulation of Duopoly: Managed Competition vs Regulated MonopoliesJournal of Economics & Management Strategy, 1997, vol. 6, issue 4, 821-847 Abstract: This paper discusses the regulation of oligopolistic differentiated‐product industries. The regulator can control prices and impose quantity restrictions, but cannot control the quality choices of the firms. We inquire about the optimal choice of regulatory regime—whether and under what conditions managed competition or segmentation of the market between regulated monopolies achieves better results. In the spatial duopoly model analyzed here, unhindered competition generally results in an inefficient allocation. When the regulator knows the technologies, optimal managed competition results in distortions of the quality choice, but an optimal regulated‐monopolies regime achieves the first best outcome. When the regulator is uncertain about the technologies, neither of these methods yields the first‐best outcome. The regulated‐monopolies regime still tends to produce better quality choices, but managed competition tends to be more effective at extracting rents from the firms. The overall comparison depends on some finer details of the environment. Date: 1997 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:6:y:1997:i:4:p:821-847 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Journal of Economics & Management Strategy from Wiley Blackwell |
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