The Promise and Pitfalls of Restructuring Network Industries
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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Volume (Year): 6 (2005)
Issue (Month): 2 (05)
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