IDEAS home Printed from
   My bibliography  Save this article

Ownership Structures in Network Industries When the Rationality of Regulators Is Bounded


  • Colombo, Massimo G
  • Rossini, Andrea


This paper analyses the implications for allocative efficiency of different ownership structures of vertically related industries in a simple game-theoretic setting. The upstream sector is monopolized and regulated, while the downstream sector is imperfectly competitive. Regulation is imperfect in that the regulatory authority suffers from bounded rationality, and is not able to enforce optimal regulation. We consider both homogenous and differentiated composite goods. It generally turns out that when the regulator's enforcement capabilities are limited, preventing the upstream monopolist from entering the downstream industry is socially undesirable, unless the independent downstream rival enjoys a substantial production cost advantage. This holds true in spite of the incentive of the vertically integrated monopolist to manipulate accounts in order to raise the costs of the downstream rival. Such reasoning especially applies when composite goods are close substitutes for one another. Copyright 1997 by Oxford University Press.

Suggested Citation

  • Colombo, Massimo G & Rossini, Andrea, 1997. "Ownership Structures in Network Industries When the Rationality of Regulators Is Bounded," Industrial and Corporate Change, Oxford University Press, vol. 6(4), pages 783-806, December.
  • Handle: RePEc:oup:indcch:v:6:y:1997:i:4:p:783-806

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Antoine Soubeyran & Hubert Stahn, 2007. "Do Investments in Specialized Knowledge Lead to Composite Good Industries?," Small Business Economics, Springer, vol. 29(1), pages 119-135, June.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:indcch:v:6:y:1997:i:4:p:783-806. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.