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
Englisch

Bibliographic citation
Series: Working Paper ; No. 0402

Classification
Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Legal Monopolies and Regulation or Deregulation
Subject
infrastructure quality
deregulation
investment incentives
access charges
regulation

Event
Geistige Schöpfung
(who)
Bühler, Stefan
Gärtner, Dennis
Halbheer, Daniel
Event
Veröffentlichung
(who)
University of Zurich, Socioeconomic Institute
(where)
Zurich
(when)
2005

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Bühler, Stefan
  • Gärtner, Dennis
  • Halbheer, Daniel
  • University of Zurich, Socioeconomic Institute

Time of origin

  • 2005

Other Objects (12)