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A primer on the welfare effects of regulatory reforms in network industries

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  • Lidia CERIANI
  • Massimo FLORIO

Abstract

Starting from an industry where production is provided by a public monopolist, we look at the effects on the consumers' surplus of a sequence of reforms in network industry. Using a simple comparative statics framework, we find indifference conditions in consumers' surplus between respectively public monopoly, unregulated private monopoly, regulated private monopoly, vertically disintegrated monopoly, duopoly and liberalized market. The results are determined by the relative size of the x-inefficiencies of the public monopolist, allocative inefficiencies of private monopoly, the cost of unbundling and costs related to establishing a competitive market.

Suggested Citation

  • Lidia CERIANI & Massimo FLORIO, 2008. "A primer on the welfare effects of regulatory reforms in network industries," Departmental Working Papers 2008-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2008-23
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    File URL: http://wp.demm.unimi.it/files/wp/2008/DEMM-2008_023wp.pdf
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    References listed on IDEAS

    as
    1. Johan Willner & David Parker, 2007. "The Performance of Public and Private Enterprise under Conditions of Active and Passive Ownership and Competition and Monopoly," Journal of Economics, Springer, vol. 90(3), pages 221-253, April.
    2. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
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    Cited by:

    1. Poggi, Ambra & Florio, Massimo, 2010. "Energy deprivation dynamics and regulatory reforms in Europe: Evidence from household panel data," Energy Policy, Elsevier, vol. 38(1), pages 253-264, January.

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    More about this item

    Keywords

    Privatization; unbundling; liberalization; network industries;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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