Header

UZH-Logo

Maintenance Infos

Deregulating Network Industries: Dealing with Price-Quality Tradeoffs


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.

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.

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.

Statistics

Downloads

1147 downloads since deposited on 29 Nov 2011
51 downloads since 12 months
Detailed statistics

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:October 2005
Deposited On:29 Nov 2011 22:31
Last Modified:21 Nov 2017 15:36
Series Name:Working paper series / Socioeconomic Institute
Official URL:http://www.econ.uzh.ch/wp.html

Download

Download PDF  'Deregulating Network Industries: Dealing with Price-Quality Tradeoffs '.
Preview
Filetype: PDF
Size: 367kB