Regulation of an Open Access Essential Facility

Manipushpak Mitra and Axel Gautier ()

No 19/2003, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

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
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Citations: View citations in EconPapers (6)

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https://www.econstor.eu/bitstream/10419/22868/1/bgse19_2003.pdf (application/pdf)

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:zbw:bonedp:192003

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