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Regulation in Vertically-Related Industries: Myths, Facts, and Policy

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  • David Sappington

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Abstract

This paper explains why conclusions that appear to be “facts” can truly be “myths” in industries like today’s telecommunications industry, where key suppliers operate in multiple vertical stages of production. The paper explains, for example, why an entrant’s decision to make or buy critical production inputs may be largely insensitive to the price of these inputs. It also reviews why a vertically-integrated producer (VIP) may prefer to assist, rather than disadvantage, retail rivals, and why a VIP may be disadvantaging rivals even when it provides them with the same wholesale service quality that it provides to its own retail affiliate. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11151-006-0005-9
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 28 (2006)
Issue (Month): 1 (02)
Pages: 3-16

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Handle: RePEc:kap:revind:v:28:y:2006:i:1:p:3-16

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: regulatory policy; vertically-related industries; myths vs. facts; L51; L43; L22;

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References

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  1. Richard J. Gilbert & Michael H. Riordan, 2003. "Product improvement and technological tying in a winner-take-all market," Discussion Papers 0304-11, Columbia University, Department of Economics.
  2. David Mandy & David E. M. Sappington, 2004. "Incentives for Sabotage in Vertically Related Industries," Working Papers 0404, Department of Economics, University of Missouri, revised 16 Dec 2004.
  3. Author One David Harbord & Author Two Marco Ottaviani, 2002. "Anticompetitive Contracts in the U.K. Pay-TV Market," Industrial Organization 0203002, EconWPA.
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Cited by:
  1. Inderst, Roman & Peitz, Martin, 2012. "Network Investment, Access and Competition," MPRA Paper 53842, University Library of Munich, Germany.
  2. Elisabetta Iossa & Francesca Stroffolini, 2008. "Vertical Integration and Costly Demand Information in Regulated Network Industries," CEDI Discussion Paper Series 08-03, Centre for Economic Development and Institutions(CEDI), Brunel University.
  3. Daniel Montolio & Francesc Trillas & Elisa Trujillo-Baute, 2014. "Regulatory environment and firm performance in EU telecommunications services," Working Papers 2014/15, Institut d'Economia de Barcelona (IEB).
  4. Inderst, Roman & Peitz, Martin, 2011. "Netzzugang, Wettbewerb und Investitionen," ZEW Discussion Papers 11-025, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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