Joint ownership and interconnection pricing in network industries

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This paper investigates a vertical market structure called joint ownership, where a monopolistic upstream firm is jointly owned and operated by competing downstream firms. As such, a common interconnection price to an upstream bottleneck is determined by bargaining among the downstream firms. We show that (1) joint ownership can be superior to the other ownership structures by overcoming vertical externality of double marginalization; (2) collusive outcomes, however, may arise surrounding the setting of common interconnection price; (3) an overall performance of joint ownership depends crucially upon how equity shares are initially distributed and which bargaining rules are employed; and finally (4) a policy measure to promote downstream competition may have ambiguous consequences under joint ownership. Some managerial and political implications in implementing joint ownership in practice are also provided. ? 1999 Elsevier Science Inc. All rights reserved.
Publisher
Elsevier BV
Issue Date
1999-06
Language
English
Citation

INTERNATIONAL REVIEW OF ECONOMICS AND FINANCE, v.8, no.2, pp.183 - 198

ISSN
1059-0560
URI
http://hdl.handle.net/10203/4125
Appears in Collection
MT-Journal Papers(저널논문)
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