Regulation of an open access essential facility
(2003)
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- Abstract
- In this paper we consider the problem of regulating an open access essential facility. A vertically integrated firm owns an essential input and operates on the downstream market under the roof of a regulatory mechanism. There is a potential entrant in the downstream market. Both competitors use the same essential input to provide the final services to the consumers. The regulator designs a mechanism that guarantees financing of the essential input and adequate competition in the downstream market. We consider a regulatory mechanism that grants non-discriminatory access of the essential facility to a competitor. We show that this mechanism is welfare improving but it generates inefficient entry. That is a more efficient competitor may stay out of the market or a less efficient competitor may enter the market.
- Affiliations
Citations
Gautier, A., & Mitra, M. (2003). Regulation of an open access essential facility (ECON Discussion Papers 2003/88). https://hdl.handle.net/2078.5/129060