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- W42644628 abstract "This chapter describes how deregulation has certainly produced a number of success stories around the world, in particular in telecommunications. However, there are some bothersome examples where deregulation has clearly not yield the expected results, such as the ill-fated reform of the British railway system, or the recent turmoil in the electric power industry in California. Overall, the evidence available suggests that the deregulation of network industries is a fairly complex business, and its success should not be taken for granted. This chapter proposes a simple model to analyze the interplay of the following effects of introducing imperfect downstream competition: (1) reduction of mark-up; (2) double marginalization; (3) underinvestment; and (4) vertical foreclosure. The results presented in the paper suggest that introducing competition and leaving the market alone may do more harm than good with regard to network industries. It is therefore not necessarily unfortunate that policy makers have tended to re-regulate rather than de-regulate network industries. In particular, they have often introduced access and retail price regulations to deal with the potentially adverse effects of introducing downstream competition. However, once we accept that in network industries, we can hardly have effective competition without adequate regulation. The second section of the chapter outlines the analytical framework of deregulation and the third section compares equilibrium prices and investments under the different market configurations. Section 4 discusses policy implications and the gives some concluding remarks." @default.
- W42644628 created "2016-06-24" @default.
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- W42644628 date "2004-01-01" @default.
- W42644628 modified "2023-09-26" @default.
- W42644628 title "Deregulation in Network Industries: A Policy in Search of a Rationale" @default.
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