Regulation and third-party discrimination in vertically related markets: The case of German electricity
This paper explores the relation between the regulation of monopolistic upstream prices and the incentives of a vertically integrated input monopolist to discriminate third parties on the downstream market. Currently, this is an issue in network industries like telecommunications, electricity and railways and has sparked off a controversy in the literature. The paper examines how the incentives to discriminate depend on the level of the upstream prices, the potential competitiveness of the downstream market and the efficiency of the competitors as compared to the integrated firm's downstream subsidiary. The insights are applied to the electricity supply industry in Germany.
|Date of creation:||2001|
|Date of revision:|
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- Sibley, David S. & Weisman, Dennis L., 1998. "Raising rivals' costs: The entry of an upstream monopolist into downstream markets," Information Economics and Policy, Elsevier, vol. 10(4), pages 451-470, December.
- Baumol, W, & Ordover, J. & Willig, R., 1996. "Parity Pricing and Its Critics: Necessary Condition for Efficiency in Provision of Bottleneck Services to Competitors," Working Papers 96-33, C.V. Starr Center for Applied Economics, New York University.
- Mandy, David M, 2000. "Killing the Goose That May Have Laid the Golden Egg: Only the Data Know Whether Sabotage Pays," Journal of Regulatory Economics, Springer, vol. 17(2), pages 157-72, March.
- Beard, T Randolph & Kaserman, David L & Mayo, John W, 2001. "Regulation, Vertical Integration and Sabotage," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 319-33, September.
- Economides, Nicholas, 2000. "Comment on "A note on N. Economides: The Incentive for Non-Price Discrimination by an Input Monopolist," by Mats Bergman," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 989-991, August.
- Reiffen, David & Schumann, Laurence & Ward, Michael R, 2000. "Discriminatory Dealing with Downstream Competitors: Evidence from the Cellular Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 253-86, September.
- John Vickers, 1995. "Competition and Regulation in Vertically Related Markets," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 1-17.
- Allen, Bruce T, 1971. "Vertical Integration and Market Foreclosure: The Case of Cement and Concrete," Journal of Law and Economics, University of Chicago Press, vol. 14(1), pages 251-74, April.
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