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The Promise and Pitfalls of Restructuring Network Industries

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Listed author(s):
  • Stefan Buehler

Abstract

This paper examines the competitive effects of reorganizing a network industry's vertical structure. In this industry, an upstream monopolist operates a network used as an input to produce horizontally differentiated final products that are imperfect substitutes. Three potential pitfalls of restructuring integrated network industries are analyzed: (i) double marginalization, (ii) underinvestment and (iii) vertical foreclosure. The paper studies the net effect of restructuring on retail prices and cost-reducing investment and discusses policy implications. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2005.

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Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 6 (2005)
Issue (Month): 2 (05)
Pages: 205-228

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Handle: RePEc:bla:germec:v:6:y:2005:i:2:p:205-228
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  1. Chen, Yongmin, 2001. "On Vertical Mergers and Their Competitive Effects," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 667-685, Winter.
  2. Mandy, David M, 2000. "Killing the Goose That May Have Laid the Golden Egg: Only the Data Know Whether Sabotage Pays," Journal of Regulatory Economics, Springer, vol. 17(2), pages 157-172, March.
  3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, July.
  4. Jeffrey Church & Neil Gandal, 2000. "Systems Competition, Vertical Merger, and Foreclosure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(1), pages 25-51, 03.
  5. Buehler, Stefan & Schmutzler, Armin & Benz, Men-Andri, 2004. "Infrastructure quality in deregulated industries: is there an underinvestment problem?," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 253-267, February.
  6. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, July.
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Cited by:

  1. Christian Growitsch & Marcus Stronzik, 2014. "Ownership unbundling of natural gas transmission networks: empirical evidence," Journal of Regulatory Economics, Springer, vol. 46(2), pages 207-225, October.
  2. Johan Willner & Sonja Gronblom, 2016. "The organisation of services of general interest in Finland," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(3), pages 89-116.
  3. Schmidtchen, Dieter & Bier, Christoph, 2006. "Netznutzungsentgelte als Wettbewerbshindernis? Diskriminierungsanreize und Regulierung in liberalisierten Strommärkten: Eine spieltheoretische Analyse," CSLE Discussion Paper Series 2006-05 [rev.], Saarland University, CSLE - Center for the Study of Law and Economics.
  4. Schmidtchen, Dieter & Bier, Christoph, 2005. "Killing the goose that may have laid the golden egg? The incentives to discriminate and the regulation of access charges in the German electricity supply industry," CSLE Discussion Paper Series 2005-07, Saarland University, CSLE - Center for the Study of Law and Economics.
  5. Dieter Schmidtchen & Christoph Bier, "undated". "Killing the Goose That May Have Laid the Golden Egg?," German Working Papers in Law and Economics 2005-1-1123, Berkeley Electronic Press.
  6. Growitsch, Christian & Stronzik, Marcus, 2011. "Ownership Unbundling of Gas Transmission Networks - Empirical Evidence," EWI Working Papers 2011-7, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
  7. Bier, Christoph & Schmidtchen, Dieter, 2006. ""Golden-Gans"-Effekt, Preisdiskriminierungsgefahr und die Regulierung von Netznutzungsentgelten," CSLE Discussion Paper Series 2006-01, Saarland University, CSLE - Center for the Study of Law and Economics.
  8. Ugur, Mehmet, 2009. "Liberalisation in a world of second best: evidence on European network industries," Greenwich Papers in Political Economy 3983, University of Greenwich, Greenwich Political Economy Research Centre.
  9. Schmidtchen, Dieter & Bier, Christoph, 2006. "Netznutzungsentgelte als Wettbewerbshindernis? Diskriminierungsanreize und Regulierung in liberalisierten Strommärkten: Eine spieltheoretische Analyse," CSLE Discussion Paper Series 2006-05, Saarland University, CSLE - Center for the Study of Law and Economics.
  10. Johan WILLNER & Sonja GRÖNBLOM, 2015. "The Organisation of Services of General Interest in Finland," CIRIEC Working Papers 1520, CIRIEC - Université de Liège.
  11. Hofer, Christian & Dresner, Martin, 2007. "Industry Issue Paper: The United States—European Union Open Aviation Area: The American Perspective," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 46(1).
  12. Dieter Schmidtchen & Christoph Bier, "undated". "Netznutzungsentgelte als Wettbewerbshindernis? Diskriminierungsanreize und Regulierung in liberalisierten Strommärkten – Eine spieltheoretische Analyse

    The Access Pricing Problem: Incentives    ," German Working Papers in Law and Economics 2006-1-1158, Berkeley Electronic Press.

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