The Effects of Vertical Separation and Access Price Regulation on Investment Incentives

Paula Sarmento

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: We study the impact of vertical separation between an upstream firm and its subsidiary, which competes in the retail market with an independent firm, with the incentive to invest in network upgrade. This question is discussed under two alternative regimes concerning the price of the vital input sold by the upstream firm: cost orientation regulation and absence of access price regulation. We show that the investment incentive decreases with vertical separation under both regimes. However, it is not always true that the investment incentive is higher without regulation.

Keywords: access price regulation; vertical integration; investment incentives (search for similar items in EconPapers)
JEL-codes: L51 L96 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2011-04
New Economics Papers: this item is included in nep-com, nep-net and nep-reg
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:410

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