Welfare Properties of Network Bypass
One result of the deregulation of utilities in New Zealand has been the bypass of existing networks. We investigate two cases of bypass in the distribution of natural gas, and compare the welfare properties of regulation vs.\ the `laissez-faire' equilibrium. We demonstrate that installing a redundant bypass can be simultaneously profitable and socially undesirable. Bypass is costly, but it reduces market power and increases the variety of goods available to consumers. Regulation is an alternative mechanism to discipline the behavior of the incumbent, but provides no variety to consumers. We find that desirability of the two regulatory regimes depends critically on the degree of differentiation between the existing and potential network. Both marginal and average cost price regulation are considered
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" 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.
|Date of creation:||11 Aug 2004|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ecm:ausm04:22. 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: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.