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Extending competition in network industries: Can input markets circumvent the need for an administered access regime?

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  • Cave, Martin

Abstract

Unbundling bottlenecks in the value chain of network industries has made it possible to introduce retail and some upstream competition into the sectors, but access to the unbundled assets, and to certain natural inputs, is generally achieved by a command and control administrative process which defines access products and sets administrative prices for them. Yet this mode of price setting and allocation is contentious, difficult and fallible. The paper explores the alternative approach of using input markets. Six examples are reviewed: three relating to natural resources (spectrum, water abstraction rights and natural gas), and three to manufactured inputs (airport landing slots, trail paths and access to pipes and wires). The analysis shows that market design is crucial; that achieving effective competition without structural measures is problematic; and that some markets have to be built on regulatory underpinnings. However, the potential benefits are large and lessons learnt can be applied elsewhere.

Suggested Citation

  • Cave, Martin, 2013. "Extending competition in network industries: Can input markets circumvent the need for an administered access regime?," Utilities Policy, Elsevier, vol. 27(C), pages 82-92.
    • Handle: RePEc:eee:juipol:v:27:y:2013:i:c:p:82-92
    DOI: 10.1016/j.jup.2013.09.006
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    References listed on IDEAS

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    Cited by:

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    3. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.

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