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Access charge and imperfect competition

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Author Info
Franois BOLDRON (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE))
Cyril HARITON (Groupe ESC Toulouse, University of Toulouse (GREMAQ))

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Abstract

A benevolent social planner which faces a cost of public funds because of distortive taxation, wants to finance an upstream monopoly. This monopoly produces a necessary input for a downstream competitive sector which competes ˆ la Cournot (with either a fixed number of firms or free entry in the downstream sector). We show that in both cases an ad valorem access charge is a better regulatory tool than a per unit access charge if the access charges are restrained to be positive. The reverse holds when access charges are used to subsidize the downstream market. We then analyze the incidence of the imperfect competition on final prices.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 2003034.

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Date of creation: 01 Sep 2003
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Handle: RePEc:ctl:louvre:2003034

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Related research
Keywords: Commodity Taxes; Essential Facility; Regulation; Vertical Relation;

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Find related papers by JEL classification:
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

References listed on IDEAS
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.:

  1. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring. [Downloadable!] (restricted)
  2. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May. [Downloadable!] (restricted)
  3. Anderson, Simon & de Palma, Andre & Kreider, Brent, 2002. "Tax Incidence in Differentiated Product Oligopoly," Staff General Research Papers 5202, Iowa State University, Department of Economics.
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  4. François Boldron & Cyril Hariton, 2003. "Access charge and imperfect competition," Recherches économiques de Louvain, De Boeck Université, vol. 69(3), pages 319-340. [Downloadable!]
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  5. Laffont, Jean-Jacques & Tirole, Jean, 1994. "Access pricing and competition," European Economic Review, Elsevier, vol. 38(9), pages 1673-1710, December. [Downloadable!] (restricted)
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  6. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Blackwell Publishing, vol. 44(2), pages 131-50, June. [Downloadable!] (restricted)
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  7. Vickers, John, 1989. "The nature of costs and the number of firms at cournot equilibrium," International Journal of Industrial Organization, Elsevier, vol. 7(4), pages 503-509, December. [Downloadable!] (restricted)
  8. Seade, Jesus, 1980. "The stability of cournot revisited," Journal of Economic Theory, Elsevier, vol. 23(1), pages 15-27, August. [Downloadable!] (restricted)
  9. Skeath, Susan E. & Trandel, Gregory A., 1994. "A Pareto comparison of ad valorem and unit taxes in noncompetitive environments," Journal of Public Economics, Elsevier, vol. 53(1), pages 53-71, January. [Downloadable!] (restricted)
  10. Delipalla, Sofia & Keen, Michael, 1992. "The comparison between ad valorem and specific taxation under imperfect competition," Journal of Public Economics, Elsevier, vol. 49(3), pages 351-367, December. [Downloadable!] (restricted)
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  11. Anderson, Simon & de Palma, Andre & Kreider, Brent, 2002. "The Efficiency of Indirect Taxes under Imperfect Competition," Staff General Research Papers 5203, Iowa State University, Department of Economics.
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  12. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring. [Downloadable!] (restricted)
  13. Kowalczyk, Carsten & Skeath, Susan E., 1994. "Pareto ranking optimal tariffs under foreign monopoly," Economics Letters, Elsevier, vol. 45(3), pages 355-359. [Downloadable!] (restricted)
  14. Johnson, Terry R, 1978. "Additional Evidence on the Effects of Alternative Taxes on Cigarette Prices," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 325-28, April. [Downloadable!] (restricted)
  15. Barzel, Yoram, 1976. "An Alternative Approach to the Analysis of Taxation," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1177-97, December. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Franois BOLDRON & Cyril HARITON, 2003. "Access charge and imperfect competition," Discussion Papers (REL - Recherches Economiques de Louvain) 2003034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
    Other versions:
  2. Francois Boldron, 2002. "On the subsidization of local monopolies," Economics Bulletin, AccessEcon, vol. 8(3), pages 1-10. [Downloadable!]
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