Access profit-sharing regulation with information acquisition and transmission

Francesca Stroffolini

Research in Economics, 2012, vol. 66, issue 2, 161-174

Abstract: This paper analyses how information acquisition and transmission on the upstream cost affect the optimal access profit-sharing plan and the regulator’s choice of an information transmission regime in network industries characterized by a regulated upstream monopoly with cost uncertainty and an unregulated downstream duopoly. When the regulator obliges the upstream monopolist to transmit information to a downstream rival, the adoption of an access profit-sharing plan may boost his/her incentives to acquire information. It will be shown that the optimal access profit-sharing plan under information transmission depends on the variance and shape of cost distribution. Moreover, an information transmission regime proves to be welfare preferable to a regime with no information transmission only if it induces information acquisition and if the regulator is significantly concerned about firms’ profits.

Keywords: Access price cap regulation; Profit-sharing; Information acquisition; Transmission (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:66:y:2012:i:2:p:161-174

DOI: 10.1016/j.rie.2011.10.002

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