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How to Regulate Vertical Market Structure in Network Industries

Author

Listed:
  • Stefan Buehler

    (Socioeconomic Institute, University of Zurich)

Abstract

This paper analyzes the equilibrium outcomes in a network industry under different 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.

Suggested Citation

  • Stefan Buehler, 2001. "How to Regulate Vertical Market Structure in Network Industries," SOI - Working Papers 0102, Socioeconomic Institute - University of Zurich.
    • Handle: RePEc:soz:wpaper:0102
    as

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    File URL: https://www.zora.uzh.ch/id/eprint/52157/1/wp0102.pdf
    File Function: First version, 2001
    Download Restriction: no
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    References listed on IDEAS

    as
    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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    Cited by:

    1. Russell Pittman, 2001. "Vertical Restructuring of the Infrastructure Sectors of Transition Economies," Industrial Organization 0111002, University Library of Munich, Germany.

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    More about this item

    Keywords

    access pricing; investment; vertical foreclosure;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation

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