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How to Regulate Vertical Market Structure in Network Industries


Buehler, Stefan (2001). How to Regulate Vertical Market Structure in Network Industries. Working paper series / Socioeconomic Institute No. 102, University of Zurich.

Abstract

This paper analyzes the equilibrium outcomes in a network industry under daccess pricing, investment, vertical foreclosureifferent vertical market structures. In this industry, an upstream monopolist operates a network used as an input to produce horizontally differentiated final products that are imperfect substitutes. Three potential drawbacks of market structure regulation are analyzed: (i) double marginalization, (ii) underinvestment, and (iii) vertical foreclosure. We explore the conditions under which these effects emerge and discuss when the breakup of an integrated network monopolist is adequate.

Abstract

This paper analyzes the equilibrium outcomes in a network industry under daccess pricing, investment, vertical foreclosureifferent vertical market structures. In this industry, an upstream monopolist operates a network used as an input to produce horizontally differentiated final products that are imperfect substitutes. Three potential drawbacks of market structure regulation are analyzed: (i) double marginalization, (ii) underinvestment, and (iii) vertical foreclosure. We explore the conditions under which these effects emerge and discuss when the breakup of an integrated network monopolist is adequate.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
Dewey Decimal Classification:330 Economics
JEL Classification:D43, L43
Language:English
Date:July 2001
Deposited On:29 Nov 2011 22:32
Last Modified:12 Aug 2017 12:58
Series Name:Working paper series / Socioeconomic Institute
Official URL:http://www.econ.uzh.ch/wp.html

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