Access pricing in network industries with mixed oligopoly

We characterize optimal regulated access prices in mixed oligopoly network industries where a private, profit-maximizing firm competes against a public enterprise after purchasing an essential input (e.g., network access). Optimal access prices often are lower for the private firm than for the publi...

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Bibliographic Details
Published in:Journal of regulatory economics 2021-06, Vol.59 (3), p.193-225
Main Authors: Cui, Shana, Sappington, David E. M.
Format: Article
Language:English
Subjects:
Access
Economics
Economics and Finance
Industrial Organization
Microeconomics
Networks
Oligopoly
Original Article
Prices
Profits
Public enterprise
Public Finance
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Summary:We characterize optimal regulated access prices in mixed oligopoly network industries where a private, profit-maximizing firm competes against a public enterprise after purchasing an essential input (e.g., network access). Optimal access prices often are lower for the private firm than for the public enterprise, and can be particularly low for a relatively efficient private supplier. In contrast to a private, profit-maximizing input supplier, the regulator reduces the access price charged to a private supplier as it becomes more efficient. The optimal access price for a private firm is the same whether it competes against another private firm or a public enterprise.
ISSN:0922-680X
1573-0468
DOI:10.1007/s11149-021-09427-2