Deregulating network industries: Dealing with price-quality tradeoffs

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 0402

Classification and Topics

• 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

Contributors, Places and Time

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

Further information

• Handle: http://hdl.handle.net/10419/76237
• Last update: 10.03.2025, 11:42 AM CET