Economic Integration and Investment Incentives in Regulated Industries
The paper studies the impact of market integration on investment incentives in non-competitive industries. It distinguishes between investment in transportation and production cost-reducing technologies. Each domestic firm is controlled by a national regulator in a common market made of two countries. When public funds are costly, and production costs in the two countries are not very different, business stealing effect decreases welfare in both countries. Welfare increases in both countries when the difference in production costs is large enough. Market integration tends to increase the level of sustainable investment in costreducing technology compared to autarky. This is in contrast with the systematic underinvestment problem arising for transportation facilities. Free-riding reduces the incentives to invest in these public-good components, while business-stealing reduces the capacity for financing new investment.
|Date of creation:||May 2009|
|Date of revision:|
|Publication status:||Published in The World Bank Economic Review, vol.�29, n°1, 2015, p.�1-40.|
|Contact details of provider:|| Postal: |
Phone: +33 (0)5 61 12 85 89
Fax: + 33 (0)5 61 12 86 37
Web page: http://www.idei.fr/
More information through EDIRC
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
4069, National Bureau of Economic Research, Inc.
- Brainard, S. Lael & Martimort, David, 1997. "Strategic trade policy with incompletely informed policymakers," Journal of International Economics, Elsevier, vol. 42(1-2), pages 33-65, February.
- Brainard, S.L. & Martimort, D., 1992. "Strategic Trade Policy with Incompletely Informed Policymakers," Papers 92.277, Toulouse - GREMAQ.
- Sara Biancini, 2008. "Regulating National Firms in a Common Market," CESifo Working Paper Series 2209, CESifo Group Munich.
- Pierre-Philippe COMBES & Bernard CAILLAUD & Bruno JULLIEN, 1997. "Common Market with Regulated Firms," Annales d'Economie et de Statistique, ENSAE, issue 47, pages 65-99.
- Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
- Emmanuelle Auriol & Pierre M. Picard, 2008.
"Infrastructure and Public Utilities Privatization in Developing Countries,"
World Bank Economic Review,
World Bank Group, vol. 23(1), pages 77-100, November.
- AURIOL, Emmanuelle & PICARD, Pierre M., . "Infrastructure and public utilities privatization in developing countries," CORE Discussion Papers RP -2180, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Auriol, Emmanuelle & Picard, Pierre M., 2006. "Infrastructure and public utilities privatization in developing countries," Policy Research Working Paper Series 3950, The World Bank.
- Auriol, Emmanuelle & Picard, Pierre M, 2006. "Infrastructure and Public Utilities Privatization in Developing Countries," CEPR Discussion Papers 6018, C.E.P.R. Discussion Papers.
- Neary, J Peter, 1991.
"Cost Asymmetries in International Subsidy Games: Should Governments Help Winners or Losers?,"
CEPR Discussion Papers
560, C.E.P.R. Discussion Papers.
- Neary, J. Peter, 1994. "Cost asymmetries in international subsidy games: Should governments help winners or losers?," Journal of International Economics, Elsevier, vol. 37(3-4), pages 197-218, November.
- Neary, James Peter, 1991. "Cost asymmetries in international subsidy games: Should governments help winners or losers?," Discussion Papers, Series II 147, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
- Gasmi, F. & Laffont, J. J. & Sharkey, W. W., 2000.
"Competition, universal service and telecommunications policy in developing countries,"
Information Economics and Policy,
Elsevier, vol. 12(3), pages 221-248, September.
- Gasmi, Farid & Laffont, Jean-Jacques & Sharkey, William, 1999. "Competition, Universal Service and Telecommunications Policy in Developing Countries," IDEI Working Papers 92, Institut d'Économie Industrielle (IDEI), Toulouse.
- Haaland, Jan I. & Kind, Hans Jarle, 2008.
"R&D policies, trade and process innovation,"
Journal of International Economics,
Elsevier, vol. 74(1), pages 170-187, January.
- F. Gasmi & J. J. Laffont & W. W. Sharkey, 1999. "Empirical Evaluation of Regulatory Regimes in Local Telecommunications Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(1), pages 61-93, 03.
- Collie, David R., 2000. "State aid in the European Union: The prohibition of subsidies in an integrated market," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 867-884, August.
- Brainard, S Lael & Martimort, David, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 81-105, January.
- repec:cup:cbooks:9780521840187 is not listed on IDEAS
- repec:cup:cbooks:9780521549486 is not listed on IDEAS
- Flacher, David & Jennequin, Hugues, 2008. "Is telecommunications regulation efficient? An international perspective," Telecommunications Policy, Elsevier, vol. 32(5), pages 364-377, June.
- Birdsall, Nancy & Nellis, John, 2003. "Winners and Losers: Assessing the Distributional Impact of Privatization," World Development, Elsevier, vol. 31(10), pages 1617-1633, October.
- Ganuza, Juan-Jose & Hauk, Esther, 2004. "Economic integration and corruption," International Journal of Industrial Organization, Elsevier, vol. 22(10), pages 1463-1484, December.
When requesting a correction, please mention this item's handle: RePEc:ide:wpaper:20805. 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: ()
If references are entirely missing, you can add them using this form.