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Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-52188

Buehler, Stefan; Gärtner, Dennis; Halbheer, Daniel (2005). Deregulating Network Industries: Dealing with Price-Quality Tradeoffs. Working paper series / Socioeconomic Institute No. 402, University of Zurich.

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Abstract

This paper examines the e®ects of introducing competition into monopolized network industries on prices and infrastructure quality. Analyzing a model with reduced-form demand, we ¯rst 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.

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
DDC:330 Economics
JEL Classification:D43, L43
Language:English
Date:October 2005
Deposited On:29 Nov 2011 23:31
Last Modified:09 Jul 2012 07:03
Series Name:Working paper series / Socioeconomic Institute
Official URL:http://www.econ.uzh.ch/wp.html

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