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Access charges, vertical separation, and lobbying

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  • Toshihiro Matsumura
  • Noriaki Matsushima

Abstract

We examine how vertical separation affects the lobbying activities forthe access charge of essential facilities. First, when investigating a model where the number of new entrants is fixed, we find that vertical separation either increases or decreases the access charge, and that this depends on the relative efficiency between the incumbent and the new entrants, and the number of entrants. Second, when investigating a free-entry market, we find that vertical separation always reduces the access charge in such a market. The vertically integratedfirm has a stronger incentive to lobby in this market because a higher access charge reduces the number of competitors.

Suggested Citation

  • Toshihiro Matsumura & Noriaki Matsushima, 2011. "Access charges, vertical separation, and lobbying," ISER Discussion Paper 0810, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0810
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    References listed on IDEAS

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    1. Laffont, Jean-Jacques & Tirole, Jean, 1994. "Access pricing and competition," European Economic Review, Elsevier, vol. 38(9), pages 1673-1710, December.
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    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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