Competition policy, regulation and the institutional design of industry supervision
We study the welfare impact of enforcing a competitive behavior from an unregulated fringe competing with a regulated dominant operator with imperfectly differentiated goods. The fringe is potentially collusive but may be supervised by a competition authority. We show that the complementarity/substitutability between regulation and competition policy strongly depends on the nature of the market interaction. Forcing the fringe to adopt a competitive behavior always benefits consumers. However, it also affects the amount of subsidy that must be provided to the regulated firm for cost-reimbursement purposes, which has a social cost when public funds are costly. With complements, antitrust intervention is always welfare-improving. It is also preferable with weak substitutes but is detrimental to welfare for strong substitutes.
(This abstract was borrowed from another version of this item.)
Volume (Year): 70 (2004)
Issue (Month): 2 ()
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- S. Lael Brainard & David Martimort, 1992.
"Strategic Trade Policy With Incompletely Informed Policymakers,"
NBER Working Papers
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"Separation of Regulators against Collusive Behavior,"
IDEI Working Papers
44, Institut d'Économie Industrielle (IDEI), Toulouse.
- Jean-Jacques Laffont & David Martimort, 1999. "Separation of Regulators Against Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 232-262, Summer.
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284, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
- S. Lael Brainard & David Martimort, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 81-105.
- POUYET, Jerôme & VEROUDEN, Vincent, 2002. "Antitrust enforcement policy and markets interaction: targeted or concerted interventions ?," CORE Discussion Papers 2002028, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- Spulber, Daniel F & Besanko, David, 1992. "Delegation, Commitment, and the Regulatory Mandate," Journal of Law, Economics and Organization, Oxford University Press, vol. 8(1), pages 126-54, March.
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