Regulation of an open access essential facility
AbstractIn 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.
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 Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2003084.
Date of creation: 00 Nov 2003
Date of revision:
Contact details of provider:
Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
regulation; railways; network; entry; competition; access charge; asymmetric information;
Other versions of this item:
- Axel Gautier & Manipushpak Mitra, 2003. "Regulation of an Open Access Essential Facility," Bonn Econ Discussion Papers bgse19_2003, University of Bonn, Germany.
- GAUTIER, Axel & MITRA, Manipushpak, . "Regulation of an open access essential facility," CORE Discussion Papers RP -2053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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.:
- Caillaud, Bernard & Tirole, Jean, 2004.
"Essential facility financing and market structure,"
Journal of Public Economics,
Elsevier, vol. 88(3-4), pages 667-694, March.
- Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
- Auriol, Emmanuelle & Laffont, Jean-Jacques, 1992.
"Regulation by Duopoly,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 1(3), pages 507-33, Fall.
- Jean-Jacques Laffont & Jean Tirole, 1994.
"Access Pricing and Competition,"
94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
- Laffont, Jean-Jacques & Tirole, Jean, 1992. "Access Pricing and Competition," IDEI Working Papers 19, Institut d'Économie Industrielle (IDEI), Toulouse.
- J-J. Laffont & J. Tirole, 1994. "Access Pricing and Competition," Working papers 95-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
- Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
- Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, December.
- Campos, Javier & Cantos, Pedro, 1999. "Regulating privatized rail transport," Policy Research Working Paper Series 2064, The World Bank.
- McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
- BLOCH, Francis & GAUTIER, Axel, 2006.
"Access pricing and entry in the postal sector,"
CORE Discussion Papers
2006065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Francis Bloch & Axel Gautier, 2006. "Access Pricing and Entry in the Postal Sector," Working Papers halshs-00411358, HAL.
- Francis Bloch & Axel Gautier, 2006. "Access Pricing and Entry in the Postal Sector," CREPP Working Papers 0606, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
- BLOCH, Francis & GAUTIER, Axel, . "Access pricing and entry in the postal sector," CORE Discussion Papers RP -2059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- GAUTIER, Axel, .
"Network financing with two-part and single tariffs,"
CORE Discussion Papers RP
-1885, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Toshihiro Matsumura & Noriaki Matsushima, 2012. "Regulated Input Price, Vertical Separation, and Leadership in Free Entry Markets," ISER Discussion Paper 0853, Institute of Social and Economic Research, Osaka University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS).
If references are entirely missing, you can add them using this form.