Reforming a Network Industry: Consequences for Cost Efficiency and Welfare

Tutkimustuotos: LehtiartikkeliArtikkeliTieteellinenvertaisarvioitu

6 Sitaatiot (Scopus)

Abstrakti

To introduce competition in an industry with an upstream natural monopoly infrastructure requires vertical separation. However, given the well-known advantages of vertical integration, such a reform would have to reduce costs in order to increase social welfare. We ask whether this would be the case if marginal costs depend on a downstream agency problem. It turns out that the opposite holds true. While entry after vertical separation can be beneficial despite higher costs, the best solution in terms of cost efficiency and welfare tends to be a welfare-maximising vertically integrated or bilateral monopoly. Vertical separation and competition are outperformed even by a profit-maximising integrated monopoly.
AlkuperäiskieliEi tiedossa
Sivut265–284
JulkaisuInternational Review of Applied Economics
Vuosikerta27
Numero2
DOI - pysyväislinkit
TilaJulkaistu - 2013
OKM-julkaisutyyppiA1 Julkaistu artikkeli, soviteltu

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