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Successive Monopolies and Regulation in a Spatial Model
Author(s) -
Heywood John S.,
Pal Debashis
Publication year - 2004
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2004.00386.x
Subject(s) - upstream (networking) , downstream (manufacturing) , profit (economics) , upstream and downstream (dna) , welfare , economics , microeconomics , order (exchange) , industrial organization , market economy , operations management , finance , computer science , telecommunications
A government authority regulates an upstream monopolist only if there is a sufficient welfare increase to justify doing so. A downstream firm strategically increases costs in order to force regulation upstream. The decision to regulate increases profit downstream, reduces profit upstream and reduces welfare relative to a model with no possibility for welfare‐enhancing regulation.