Successive Monopolies and Regulation in a Spatial Model

John Heywood and Debashis Pal ()

Manchester School, 2004, vol. 72, issue 2, 167-178

Abstract: A government authority regulates an upstream monopolist only if there is a sufficient welfare increase to justify doing so. A downstream firm strategically increases costs in order to force regulation upstream. The decision to regulate increases profit downstream, reduces profit upstream and reduces welfare relative to a model with no possibility for welfare‐enhancing regulation.

Date: 2004
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