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The Promise and Pitfalls of Restructuring Network Industries

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  • 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. Benz, Men-Andri & Bühler, Stefan & Schmutzler, Armin, 2003. "Infrastructure Quality in Deregulated Industries: Is there an Underinvestment Problem?," CEPR Discussion Papers 3836, C.E.P.R. Discussion Papers.
  2. Yongmin Chen, 2000. "On Vertical Mergers and Their Competitive Effects," Econometric Society World Congress 2000 Contributed Papers 0383, Econometric Society.
  3. Church, J. & Gandal, N., 1996. "Systems Competition, Vertical Merger and Foreclosure," Papers 6-96, Tel Aviv - the Sackler Institute of Economic Studies.
  4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
  5. repec:dgr:kubcen:199716 is not listed on IDEAS
  6. 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 157-72, March.
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Cited by:

  1. 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.
  2. 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.
  3. Ugur, Mehmet, 2009. "Liberalisation in a world of second best: evidence on European network industries," MPRA Paper 17873, University Library of Munich, Germany, revised 13 Oct 2009.
  4. Dieter Schmidtchen & Christoph Bier, . "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.
  5. 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.
  6. 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.
  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. Dieter Schmidtchen & Christoph Bier, . "Killing the Goose That May Have Laid the Golden Egg?," German Working Papers in Law and Economics 2005-1-1123, Berkeley Electronic Press.
  9. 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.

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