Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80781
Authors: 
Minamihashi, Naoaki
Year of Publication: 
2012
Series/Report no.: 
Bank of Canada Working Paper 2012-26
Abstract: 
Can regulation solve problems arising from a natural monopoly? This paper analyzes whether unbundling, referring to regulations that enforce sharing of natural monopolistic infrastructure, prevents entrants from building new infrastructure. It models and estimates a dynamic entry game to evaluate the effects of regulation, using a dataset for construction of fiber-optic networks in Japan. The counterfactual exercise shows that forced unbundling regulation leads to a 24% decrease in the incidence of new infrastructure builders. This suggests, therefore, that when a new technology is being diffused, regulation to remove a natural monopoly conversely involves risks that regulated monopolists' shares will increase.
Subjects: 
Market structure and pricing
Productivity
JEL: 
K23
L43
L96
Document Type: 
Working Paper

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