This paper examines the welfare effects of physically interconnecting two (network) markets that were previously separated. In each market a different set of capacity-constrained firms operate. Firms engage in a supergame and collude whenever it is rational for them to do so.We find that, under certain parametric restrictions, interconnection of the two markets reduces total welfare. The collusive horizon may extend from a single market to the overall integrated market. In such case, interconnection can be viewed as “exporting” collusion, rather than competition.
An Anti-Competitive Effect of Eliminating Transport Barriers in Network Markets
BOFFA, FEDERICO;
2009-01-01
Abstract
This paper examines the welfare effects of physically interconnecting two (network) markets that were previously separated. In each market a different set of capacity-constrained firms operate. Firms engage in a supergame and collude whenever it is rational for them to do so.We find that, under certain parametric restrictions, interconnection of the two markets reduces total welfare. The collusive horizon may extend from a single market to the overall integrated market. In such case, interconnection can be viewed as “exporting” collusion, rather than competition.File in questo prodotto:
| File | Dimensione | Formato | |
|---|---|---|---|
|
Offprints RIO.pdf
accesso aperto
Tipologia:
Documento in post-print (versione successiva alla peer review e accettata per la pubblicazione)
Licenza:
DRM non definito
Dimensione
210.74 kB
Formato
Adobe PDF
|
210.74 kB | Adobe PDF | Visualizza/Apri |
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
