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Bonn Graduate School of Economics (BGSE), Universität Bonn >
Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn >
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http://hdl.handle.net/10419/22868
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| Title: | | Regulation of an Open Access Essential Facility  |
| Authors: | | Mitra, Manipushpak Gautier, Axel |
| Issue Date: | | 2003 |
| Series/Report no.: | | Bonn econ discussion papers 2003,19 |
| 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. |
| Subjects: | | Regulation Railways Network Entry Competition Access charge Asymmetric Information |
| JEL: | | L51 H54 D82 L11 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn
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