Please use this identifier to cite or link to this item: http://buratest.brunel.ac.uk/handle/2438/3491
Title: Vertical integration and costly demand information in regulated network industries
Authors: Iossa, E
Stroffolini, F
Keywords: Access price regulation; Information acquisition; integration; separation; vertically-related industries
Issue Date: 2008
Publisher: Brunel University
Citation: Economics and Finance Working papers, Brunel University, 08-05.
Abstract: We study how vertical integration in regulated network industries affects the acquisition and transmission of socially valuable information on demand. We consider a regulated upstream monopoly with downstream unregulated Cournot competition and demand uncertainty. Demand information serves to set the access price and to foster competition in the unregulated segment but demand realizations can be observed at some cost only by the upstream monopolist; information acquisition is also unobservable. We show that vertical integration favours acquisition of demand information because of the transmission of information generated by the public nature of the regulatory mechanism. This holds both when access to information is easier for the upstream firm and when it is easier for downstream firms.
URI: http://bura.brunel.ac.uk/handle/2438/3491
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

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