Network interconnectivity with competition and regulation

Jolian McHardy, Michael Reynolds and Stephen Trotter

Transportation Research Part A: Policy and Practice, 2013, vol. 47, issue C, 97-110

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 a scenario 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)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eee:transa:v:47:y:2013:i:c:p:97-110

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DOI: 10.1016/j.tra.2012.10.026

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