A primer on the welfare effects of regulatory reforms in network industries
AbstractStarting from an industry where production is provided by a public monopolist, we look at the effects on the consumers' surplus of a sequence of reforms in network industry. Using a simple comparative statics framework, we find indifference conditions in consumers' surplus between respectively public monopoly, unregulated private monopoly, regulated private monopoly, vertically disintegrated monopoly, duopoly and liberalized market. The results are determined by the relative size of the x-inefficiencies of the public monopolist, allocative inefficiencies of private monopoly, the cost of unbundling and costs related to establishing a competitive market.
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Bibliographic InfoPaper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2008-23.
Date of creation: 08 Jul 2008
Date of revision:
Privatization; unbundling; liberalization; network industries;
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-COM-2009-06-17 (Industrial Competition)
- NEP-ENE-2009-06-17 (Energy Economics)
- NEP-MIC-2009-06-17 (Microeconomics)
- NEP-NET-2009-06-17 (Network Economics)
- NEP-REG-2009-06-17 (Regulation)
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