Arbeitspapier

Competition and regulation in a differentiated good market

This paper addresses the issue of how to design the institutional structure of an industry which provides two differentiated products. One good is supplied by a regulated monopoly and the other is produced in a competitive (unregulated) segment. Two possible institutional patterns are compared. Under 'concentration' the regulated firm can enter the competitive segment by owning one firm which operates there (even though the two firms must be legally unbundled). The regime of 'separation' implies that regulated activities are totally unbundled from the unregulated ones, that is, common ownership is not allowed. When the regulator does not know the regulated monopoly's cost of production, we find that the pattern of separation improves (expected) social welfare as long as goods are substitutes. Conversely, concentration performs better in case of complementarity.

Language
Englisch

Bibliographic citation
Series: SFB 649 Discussion Paper ; No. 2011-084

Classification
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Production, Pricing, and Market Structure; Size Distribution of Firms
Economics of Regulation
Subject
competition
complementarity
concentration
regulation, separation, substitutability
Regulierung
Produktdifferenzierung
Unternehmensregulierung
Wettbewerb
Wirtschaftskonzentration
Theorie

Event
Geistige Schöpfung
(who)
Fiocco, Raffaele
Event
Veröffentlichung
(who)
Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
(where)
Berlin
(when)
2011

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Fiocco, Raffaele
  • Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk

Time of origin

  • 2011

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