How to Regulate Vertical Market Structure in Network Industries

Stefan Buehler

No 102, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: This paper analyzes the equilibrium outcomes in a network industry under different vertical market structures. In this industry, an upstream monopolist operates a network used as an input to produce horizontally differentiated final products that are imperfect substitutes. Three potential drawbacks of market structure regulation are analyzed: (i) double marginalization, (ii) underinvestment, and (iii) vertical foreclosure. We explore the conditions under which these effects emerge and discuss when the breakup of an integrated network monopolist is adequate.

Keywords: access pricing; investment; vertical foreclosure (search for similar items in EconPapers)
JEL-codes: D43 L43 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2001-07
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Citations: View citations in EconPapers (1)

Published in German Economic Review 6(2), 2005, pages 205-228

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https://www.zora.uzh.ch/id/eprint/52157/1/wp0102.pdf First version, 2001 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0102

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