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Optimal access regulation with downstream competition

Author

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  • Tina Kao
  • Flavio Menezes

    ()

  • John Quiggin

Abstract

We analyze the setting of access prices for a bottleneck facility where the facility owner also competes in the deregulated downstream market. We consider a continuum of market structures from Cournot to Bertrand. These market structures are fully characterized by a single parameter representing the intensity of competition. We first show how the efficient component pricing rule should be modified as the downstream competitive intensity changes. We then analyse the optimal access price where a regulator trades off production efficiency and pro-competitive effects to maximize total surplus. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Tina Kao & Flavio Menezes & John Quiggin, 2014. "Optimal access regulation with downstream competition," Journal of Regulatory Economics, Springer, vol. 45(1), pages 75-93, February.
  • Handle: RePEc:kap:regeco:v:45:y:2014:i:1:p:75-93
    DOI: 10.1007/s11149-013-9231-x
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    References listed on IDEAS

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    Cited by:

    1. Rod Tyers, 2015. "Service Oligopolies and Australia's Economy-Wide Performance," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 48(4), pages 333-356, December.
    2. repec:bla:jpbect:v:19:y:2017:i:4:p:841-859 is not listed on IDEAS
    3. Flavio M. Menezes & Jorge Pereira, 2017. "Emissions abatement R&D: Dynamic competition in supply schedules," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(4), pages 841-859, August.

    More about this item

    Keywords

    Access regulation; Entry; Regulatory commitment ; Efficient component pricing rule; L51;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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