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Successive Monopolies and Regulation in a Spatial Model

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  • John S. Heywood
  • Debashis Pal

Abstract

A government authority regulates an upstream monopolist only if there is a sufficient welfare increase to justify doing so. A downstream firm strategically increases costs in order to force regulation upstream. The decision to regulate increases profit downstream, reduces profit upstream and reduces welfare relative to a model with no possibility for welfare‐enhancing regulation.

Suggested Citation

  • John S. Heywood & Debashis Pal, 2004. "Successive Monopolies and Regulation in a Spatial Model," Manchester School, University of Manchester, vol. 72(2), pages 167-178, March.
    • Handle: RePEc:bla:manchs:v:72:y:2004:i:2:p:167-178
    DOI: 10.1111/j.1467-9957.2004.00386.x
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    References listed on IDEAS

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    1. Lee, Sang Hyup & Hamilton, Jonathan H, 1999. "Using Market Structure to Regulate a Vertically Integrated Monopolist," Journal of Regulatory Economics, Springer, vol. 15(3), pages 223-248, May.
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    3. Gupta, Barnali & Heywood, John S. & Pal, Debashis, 1995. "Strategic behavior downstream and the incentive to integrate: A spatial model with delivered pricing," International Journal of Industrial Organization, Elsevier, vol. 13(3), pages 327-334, September.
    4. Masten, Scott E. (ed.), 1996. "Case Studies in Contracting and Organization," OUP Catalogue, Oxford University Press, number 9780195092523.
    5. Damania, D, 1996. "The Scope for Collusion and Competition in a Regulated Vertically Integrated Industry," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 253-264, July.
    6. John Vickers, 1995. "Competition and Regulation in Vertically Related Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(1), pages 1-17.
    7. D. Damania, 1996. "The Scope For Collusion And Competition In A Regulated Vertically Integrated Industry," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 253-264, July.
    8. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, December.
    9. Damania, D., 1996. "The scope for collusion in a regulated vertically integrated telecommunications industry," Information Economics and Policy, Elsevier, vol. 8(2), pages 141-160, June.
    10. Brunekreeft, Gert, 1997. "Open access vs. common carriage in electricity supply," Energy Economics, Elsevier, vol. 19(2), pages 225-238, May.
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    Cited by:

    1. Rim Lahmandi-Ayed & Hejer Lasram & Didier Laussel, 2020. "Is partial privatization of universities a solution for higher education? A successive monopolies model," Working Papers hal-02988323, HAL.
    2. Rim Lahmandi‐Ayed & Hejer Lasram & Didier Laussel, 2021. "Is partial privatization of universities a solution for higher education?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1174-1198, December.

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