New Networks, Competition and Regulation

Arbeitspapier

We consider a model with two firms operating their individual networks. Each firm can choose its price as well as its investment to build up its network. Assuming a skewed distribution of consumers, our model leads to an asymmetric market structure with one firm choosing higher investments. While access regulation imposed on the dominant firm leads to lower prices, positive welfare effects are diminished by strategic investment decisions of the firms. Within a dynamic game with indirect network effects leading to potentially increased demand, regulation can substantially lower aggregate social welfare. Conditional access holidays can alleviate regulatory failure.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 568

Classification and Topics

• Classification: Wirtschaft ; Economics of Regulation ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets
• Subject: Regulation ; network effects ; natural monopoly ; Stromnetz ; Netzzugang ; Elektrizitätswirtschaft ; Regulierung ; Niederlande ; EU-Staaten ; Großbritannien ; Neuseeland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Baake, Pio ; Kameckey, Ulrich
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/18461
• Last update: 10.03.2025, 11:44 AM CET