Arbeitspapier
Deregulating network industries: Dealing with price-quality tradeoffs
This paper examines the effects of introducing competition into monopolized network industries on prices and infrastructure quality. Analyzing a model with reduced-form demand, we first show that deregulating an integrated monopoly cannot simultaneously decrease the retail price and increase infrastructure quality. Second, we derive conditions under which reducing both retail price and infrastructure quality relative to the integrated monopoly outcome increases welfare. Third, we argue that restructuring and setting very low access charges may yield welfare losses, as infrastructure investment is undermined. We provide an extensive analysis of the linear demand model and discuss policy implications.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 0402
- Classification
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Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Legal Monopolies and Regulation or Deregulation
- Subject
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infrastructure quality
deregulation
investment incentives
access charges
regulation
- Event
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Geistige Schöpfung
- (who)
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Bühler, Stefan
Gärtner, Dennis
Halbheer, Daniel
- Event
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Veröffentlichung
- (who)
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University of Zurich, Socioeconomic Institute
- (where)
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Zurich
- (when)
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2005
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Bühler, Stefan
- Gärtner, Dennis
- Halbheer, Daniel
- University of Zurich, Socioeconomic Institute
Time of origin
- 2005