Managerial incentives and access price regulation

• Autores: Øystein Foros, Hans Jarle Kind, Lars Sørgard
• Localización: European journal of law and economics, ISSN 0929-1261, Vol. 23, Nº 2, 2007, págs. 117-133
• Idioma: inglés
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• Resumen

  • Policy makers have identified the non-discrimination principle as a key instrument to regulate vertically integrated firms in control of upstream bottlenecks. It has been argued that the non-discrimination principle may create a level playing field, but at the expense of higher consumer prices. However, this rests on the assumption that the firms do not respond strategically to the regulation. We show that a non-discrimination requirement makes the vertically integrated firm behave more aggressively. Consequently, non-discrimination regulation rarely creates a level playing field. Neither does it necessarily increase end-user prices. Indeed, we show that end-user prices may fall.