Infrastructure Quality in Deregulated Industries: Is there an Underinvestment Problem?

Stefan Buehler, Armin Schmutzler and Men-Andri Benz ()
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Men-Andri Benz: Institute for Strategy and Business Economics, University of Zurich

No 209, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: We investigate how various institutional settings affect a network provider�s incentives to invest in infrastructure quality. Under reasonable assumptions on demand, investment incentives turn out to be smaller under vertical separation than under vertical integration, though we also provide counter-examples. The introduction of downstream competition for the market can sometimes improve incentives. With suitable non-linear access prices investment incentives under separation become identical to those under integration.

Keywords: investment incentives; networks; quality; vertical externality. (search for similar items in EconPapers)
JEL-codes: D42 L22 L43 L92 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2002-08
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Citations: View citations in EconPapers (20)

Published in Journal of Industrial Organization 22(2), 2004, pages 253-267

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https://www.zora.uzh.ch/id/eprint/52167/1/wp0209.pdf First version, 2002 (application/pdf)

Related works:
Journal Article: Infrastructure quality in deregulated industries: is there an underinvestment problem? (2004)
Working Paper: Infrastructure Quality in Deregulated Industries: Is there an Underinvestment Problem? (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0209

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