Integration and Separation with Costly Demand Information
AbstractWe consider an industry characterized by a regulated natural monopoly in the upstream market and Cournot competition with demand uncertainty in the unregulated downstream market. The realization of demand cannot be observed by the regulator, whilst it can be privately observed at some cost by the upstream monopolist. Information acquisition is also unobservable. We study whether it is better to allow the monopolist to operate in the downstream market (integration) or instead to exclude it (separation). We show that asymmetric information on demand favours separation but unobservability of information acquisition favours integration.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 07/167.
Length: 23 pages
Date of creation: Jan 2007
Date of revision:
Information acquisition; liberalization and separation;
Other versions of this item:
- Elisabetta Iossa & Francesca Stroffolini, 2007. "Integration and Separation with Costly Demand Information," CSEF Working Papers 170, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L5 - Industrial Organization - - Regulation and Industrial Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-10 (All new papers)
- NEP-COM-2007-03-10 (Industrial Competition)
- NEP-MIC-2007-03-10 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Severin Borenstein, 2002. "The Trouble With Electricity Markets: Understanding California's Restructuring Disaster," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 191-211, Winter.
- Elisabetta Iossa & Patrick Legros, 2004.
"Auditing and property rights,"
ULB Institutional Repository
2013/7028, ULB -- Universite Libre de Bruxelles.
- Cremer, Jacques & Khalil, Fahad & Rochet, Jean-Charles, 1998.
"Contracts and Productive Information Gathering,"
Games and Economic Behavior,
Elsevier, vol. 25(2), pages 174-193, November.
- Cremer, J. & Khalil, F. & Rochet, J-C., 1997. "Contracts and Productive Information Gathering," Papers 97.468, Toulouse - GREMAQ.
- Khalil, F & Rochet, J-C, 1997. "Contracts and Productive Information Gathering," Working Papers 97-16, University of Washington, Department of Economics.
- Khalil, F & Rochet, J-C, 1997. "Contracts and Productive Information Gathering," Discussion Papers in Economics at the University of Washington 97-16, Department of Economics at the University of Washington.
- Cremer, J. & Khalil, F. & Rochet, J-C., 1997. "Contracts and productive information gathering," Discussion Paper Series In Economics And Econometrics 9707, Economics Division, School of Social Sciences, University of Southampton.
- Vickers, John, 1995. "Competition and Regulation in Vertically Related Markets," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 1-17, January.
- Iossa, Elisabetta & Stroffolini, Francesca, 2002. "Price cap regulation and information acquisition," International Journal of Industrial Organization, Elsevier, vol. 20(7), pages 1013-1036, September.
- Hurkens, Sjaak & Vulkan, Nir, 2001.
"Information acquisition and entry,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 44(4), pages 467-479, April.
- Esther Hauk & Sjaak Hurkens, 2001.
"Secret information acquisition in Cournot markets,"
Springer, vol. 18(3), pages 661-681.
- repec:cep:stitep:260 is not listed on IDEAS
- David M Newbery, 2002. "Regulating Unbundled Network Utilities," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 23-41.
- Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, Elsevier.
- Dimitrova, Magdalena & Schlee, Edward E., 2003. "Monopoly, competition and information acquisition," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1623-1642, December.
- Francesca Stroffolini, 2008. "Access Price Cap Mechanisms and Industry Structure with Information Acquisition," CSEF Working Papers 193, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jacqui Barton).
If references are entirely missing, you can add them using this form.