Regulation of an open access essential facility

Axel Gautier () and Manipushpak Mitra

No 2003084, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper we consider the problem of regulating an open access essential facility. A vertically integrated firm owns an essential input and operates on the downstream market under the roof of a regulatory mechanism. There is a potential entrant in the downstream market. Both competitors use the same essential input to provide the final services to the consumers. The regulator designs a mechanism that guarantees financing of the essential input and adequate competition in the downstream market. We consider a regulatory mechanism that grants non-discriminatory access of the essential facility to a competitor. We show that this mechanism is welfare improving but it generates inefficient entry. That is a more efficient competitor may stay out of the market or a less efficient competitor may enter the market.

Keywords: regulation; railways; network; entry; competition; access charge; asymmetric information (search for similar items in EconPapers)
JEL-codes: D82 H54 L11 L51 (search for similar items in EconPapers)
Date: 2003-11
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Regulation of an open access essential facility (2009)
Journal Article: Regulation of an Open Access Essential Facility (2008)
Working Paper: Regulation of an Open Access Essential Facility (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2003084

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