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Access charge and imperfect competition

Author

Listed:
  • François BOLDRON

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE))

  • Cyril HARITON

    (Groupe ESC Toulouse, University of Toulouse (GREMAQ))

Abstract

A benevolent social planner which faces a cost of public funds because of distortive taxation, wants to finance an upstream monopoly. This monopoly produces a necessary input for a downstream competitive sector which competes à la Cournot (with either a fixed number of firms or free entry in the downstream sector). We show that in both cases an ad valorem access charge is a better regulatory tool than a per unit access charge if the access charges are restrained to be positive. The reverse holds when access charges are used to subsidize the downstream market. We then analyze the incidence of the imperfect competition on final prices.

Suggested Citation

  • François BOLDRON & Cyril HARITON, 2003. "Access charge and imperfect competition," Discussion Papers (REL - Recherches Economiques de Louvain) 2003034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2003034
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    1. repec:ebl:ecbull:v:8:y:2002:i:3:p:1-10 is not listed on IDEAS
    2. François Boldron & Cyril Hariton, 2003. "Access charge and imperfect competition," Recherches économiques de Louvain, De Boeck Université, vol. 69(3), pages 319-340.
    3. Francois Boldron, 2002. "On the subsidization of local monopolies," Economics Bulletin, AccessEcon, vol. 8(3), pages 1-10.

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    More about this item

    Keywords

    Commodity Taxes; Essential Facility; Regulation; Vertical Relation;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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