Local versus global price cap: A comparison of foreclosure incentives
AbstractThis paper compares two regulatory devices for handling (access to) bottlenecks in deregulated network industries: (1) a local price cap and (2) a global price cap, the latter of which applies the efficient component pricing rule. The local price cap restricts profit regulation to the bottleneck, whereas a complementary set of measures intends to curb the resulting incentives for foreclosure of the competitive markets. The global price cap extends regulation to the entire firm, which should take away the foreclosure incentives. This major advantage of the global price cap is contrasted to possible disadvantages, which centre around renewed foreclosure incentives. --
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Bibliographic InfoPaper provided by University of Freiburg, Institute for Transport Economics and Regional Policy in its series Discussion Papers with number 36.
Date of creation: 1997
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Find related papers by JEL classification:
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
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- Knieps, Gunter, 1997. "Phasing Out Sector-Specific Regulation in Competitive Telecommunications," Kyklos, Wiley Blackwell, vol. 50(3), pages 325-39.
- Brunekreeft, Gert & Keller, Katja, 2000. "The electricity supply industry in Germany: market power or power of the market?," Utilities Policy, Elsevier, vol. 9(1), pages 15-29, March.
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