Infrastructure Quality in Deregulated Industries: Is There an Underinvestment Problem?
Journal
International Journal of Industrial Organization
ISSN
0167-7187
ISSN-Digital
1873-7986
Type
journal article
Date Issued
2004-02-01
Author(s)
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 counterexamples. 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.
Language
English
Keywords
Investment incentives
Networks
Quality
Vertical externality
HSG Classification
not classified
Refereed
No
Publisher
Elsevier
Publisher place
Amsterdam
Volume
22
Number
2
Start page
253
End page
267
Pages
15
Subject(s)
Eprints ID
10210