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Access charge and imperfect competition

  • François Boldron
  • Cyril Hariton

A benevolent social planner which faces a cost of public funds because of distortive taxation, wants to finance an upstream monopoly. This monopoly produces a necessary input for a downstream competitive sector which competes à la Cournot (with either a fixed number of firms or free entry in the downstream sector). We show that in both cases an ad valorem access charge is a better regulatory tool than a per unit access charge if the access charges are restrained to be positive. The reverse holds when access charges are used to subsidize the downstream market. We then analyze the incidence of the imperfect competition on final prices.

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Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

Volume (Year): 69 (2003)
Issue (Month): 3 ()
Pages: 319-340

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Handle: RePEc:cai:reldbu:rel_693_0319
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  1. Seade, Jesus, 1980. "The stability of cournot revisited," Journal of Economic Theory, Elsevier, vol. 23(1), pages 15-27, August.
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