Optimal Access Regulation with Downstream Competition
AbstractWe analyze the setting of access prices for a bottleneck facility where the facility owner also competes in the deregulated downstream market. We consider a continuum of market structures from Cournot to Bertrand. These market structures are fully characterized by a single parameter representing the intensity of competition. We first show how the efficient component pricing rule (ECPR) should be modified as the downstream competitive intensity changes. We then analyse the optimal access price where a regulator trades off production efficiency and pro-competitive effects to maximize total surplus.
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Bibliographic InfoPaper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 473.
Date of creation: 03 Dec 2012
Date of revision:
Other versions of this item:
- Kao, Tina & Menezes, Flavio & Quiggin, John, 2012. "Optimal access regulation with downstream competition," Risk and Sustainable Management Group Working Papers 151201, University of Queensland, School of Economics.
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-22 (All new papers)
- NEP-COM-2012-12-22 (Industrial Competition)
- NEP-IND-2012-12-22 (Industrial Organization)
- NEP-REG-2012-12-22 (Regulation)
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