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Regulation and third-party discrimination in vertically related markets: The case of German electricity

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  • Brunekreeft, Gert

Abstract

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.

Suggested Citation

  • Brunekreeft, Gert, 2001. "Regulation and third-party discrimination in vertically related markets: The case of German electricity," Discussion Papers 74 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    • Handle: RePEc:zbw:aluivr:74r
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    References listed on IDEAS

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    1. Perry, Martin K., 1989. "Vertical integration: Determinants and effects," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 4, pages 183-255, Elsevier.
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    17. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gabelmann, Anne, 2001. "Regulating European telecommunications markets: Unbundled access to the local loop outside urban areas," Discussion Papers 81, University of Freiburg, Institute for Transport Economics and Regional Policy.
    2. Gert Brunekreeft, 2002. "Regulation and Third-Party Discrimination in the German Electricity Supply Industry," European Journal of Law and Economics, Springer, vol. 13(3), pages 203-220, May.
    3. Knieps, Günter, 2006. "The different role of mandatory access in German regulation of railroads and telecommunications," Discussion Papers 104 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    4. Knieps, Günter, 2004. "Privatisation of Network Industries in Germany: A Disaggregated Approach," Discussion Papers 100, University of Freiburg, Institute for Transport Economics and Regional Policy.
    5. Knieps, Günter, 2002. "Does the system of letter conveyance constitute a bottleneck resource?," Discussion Papers 88, University of Freiburg, Institute for Transport Economics and Regional Policy.
    6. Knieps, Günter, 2002. "Wholesale, retail pricing in telecom markets," Discussion Papers 84, University of Freiburg, Institute for Transport Economics and Regional Policy.
    7. Knieps, Günter, 2008. "The net neutrality debate and the German communications and competition law," Discussion Papers 120, University of Freiburg, Institute for Transport Economics and Regional Policy.

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    More about this item

    Keywords

    regulation; discrimination; vertical integration; electricity;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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