Infrastructure quality in deregulated industries : is there an underinvestment problem

Stefan Buehler, Armin Schmutzler and Men-Andri Benz

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. -- investment incentives ; networks ; quality ; vertical externality

MoreLess

Year of publication:	Aug. 2002 ; [Elektronische Ressource]
Other Persons:	Bühler, Stefan (contributor) ; Schmutzler, Armin (contributor) ; Benz, Men-Andri (contributor)
Institutions:	Universität Zürich / Sozialökonomisches Institut (contributor) ; Universität Zürich / Sozialökonomisches Seminar (contributor)
Publisher:	Zürich : Univ., Sozialökonomisches Seminar
Subject:	Versorgungswirtschaft \| Public utilities \| Investition \| Investment \| Institutionelle Infrastruktur \| Institutional infrastructure \| Deregulierung \| Deregulation \| Privatisierung \| Privatization \| Theorie \| Theory \| Netzinfrastruktur \| Network infrastructure