Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22868
Authors: 
Mitra, Manipushpak
Gautier, Axel
Year of Publication: 
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

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