Discussion Paper Details
Please find the details for DP3836 in an easy to copy and paste format below:
Title: Infrastructure Quality in Deregulated Industries: Is there an Underinvestment Problem?
Author(s): Men-Andri Benz, Stefan Bühler and Armin Schmutzler
Publication Date: March 2003
Keyword(s): investment incentives, networks, quality and vertical externality
Programme Area(s): Industrial Organization
Abstract: We investigate how various institutional settings affect a network provider?s incentives to invest in infrastructure quality. Under reasonable assumptions on demand, investment incentives turn out to be smaller under vertical separation than under vertical integration, though we also provide counter-examples. The introduction of downstream competition for the market can sometimes improve incentives. With suitable non-linear access prices investment incentives under separation become identical to those under integration.
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Benz, M, Bühler, S and Schmutzler, A. 2003. 'Infrastructure Quality in Deregulated Industries: Is there an Underinvestment Problem?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3836