Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92834
Authors: 
Matsumura, Toshihiro
Matsushima, Noriaki
Year of Publication: 
2012
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 853
Abstract: 
We examine incentives of bottleneck facility holders to manipulate access charge accounting in free entry downstream markets. We consider the situation wherein one firm holds an upstream bottleneck facility and new entrants use it at the regulated price (access fee) to provide final products. The bottleneck facility holder affects the regulated input price. We investigate how vertical separation affects the incentive for manipulation and the resulting input price. We find that the results depend on whether the incumbent is the Stackelberg leader in the product market. If the incumbent cannot take leadership in the product market and faces Cournot competition, vertical separation reduces the incentive for manipulation and the resulting input price. The opposite result is derived when the incumbent can take leadership in the product market.
Subjects: 
network industry
access charge
manipulation of accounting
regulation
JEL: 
L51
L13
Document Type: 
Working Paper

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