Infrastructure quality in deregulated industries: is there an underinvestment problem?

Buehler, Stefan; Schmutzler, Armin; Benz, Men-Andri

doi:10.1016/j.ijindorg.2003.07.004

Cited by 53 publications

(31 citation statements)

References 6 publications

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“…Sidak and Spulber (1997) emphasise the significance of the regulator's commitment problem in a dynamic setting. Buehler et al (2004) examine the effects of several different institutional settings on a network owner's investment incentives, but they do not consider the case of an integrated network owner competing with independent downstream rivals. Cambini and Valletti (2003) study competing network operators' incentives to invest in facilities with different levels of quality Numerous authors have considered the question of how investment spillovers affect private incentives to perform R&D. These studies date back to Arrow (1962) and the issue has later been examined among others by Spence (1984), D'Aspremont andJacquemin (1988) and Kamien, Muller and Zang (1992).…”

Section: Related Literaturementioning

confidence: 99%

Access price regulation, investment and entry in telecommunications

Kotakorpi

2006

International Journal of Industrial Organization

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Abstract:We consider a model with a vertically integrated monopolist network provider who faces rival operators in the retail market. We examine the network operator's incentives to invest in a technology that increases demand. We find that investments are below the social optimum even when there is no regulation, and access price regulation further reduces investment incentives. The underinvestment problem may have negative effects on the viability of competition and in the presence of access price regulation, rivals are most likely to be foreclosed when they would bring highest benefits to consumers.

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Section: Related Literaturementioning

confidence: 99%

Access price regulation, investment and entry in telecommunications

Kotakorpi

2006

International Journal of Industrial Organization

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“…This effect is e.g. investigated analytically by Bühler et al (2004). Partly this is due to a change in utilities' asset management strategies with the aim of reducing total maintenance costs.…”

Section: Introductionmentioning

confidence: 99%

Optimal replacement strategies in network infrastructures under quality penalties

Schober

Schaeffler²

2010

Z Betriebswirtsch

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As a consequence of liberalization, electric utilities have developed different asset management strategies with the aim of reducing total maintenance costs by prolonging replacement cycles. A cost-minimizing network operator has to optimize the trade-off between costs for early replacement and quality penalties he faces in the case of outages (due to a resulting higher number of failures). The basic purpose of this paper is to identify the optimal decisions for a network operator under output-based quality regulation and to determine the main drivers for his decisions. In order to derive general insights, an analytical framework is chosen for this paper. This work builds on the foundations of optimal maintenance and replacement strategies as developed across Operations Research, Production Economics and Engineering Production Theory. As main results we are able to analytically derive optimal replacement strategies for network components depending on the characteristics of their failure distributions linked to the equipment's cost, respective replacement cost, and quality penalties.

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“…In the case of the British reform, both issues were hotly debated (see, e.g. Bühler et al 2004). 4 Officially, the law is known as Gesetz zur Regionalisierung des öffentlichen Personennahverkehrs.…”

Section: Introductionmentioning

confidence: 99%

Exploring the effects of competition for railway markets

Lalive

Schmutzler

2008

International Journal of Industrial Organization

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This paper studies the effects of introducing competition for local passenger railway markets in the German state of Baden-Württemberg. We compare the evolution of the frequency of service on lines that were exposed to competition for the market with lines procured by direct negotiations with the incumbent. Our results suggest that the competitively procured lines enjoyed a stronger growth of the frequency of service than those that were not procured competitively, even after controlling for various line characteristics that might have had an independent influence on the frequency of service. Our results further suggest that the effects of competition may depend strongly on the operator. Abstract: This paper studies the effects of introducing competition for local passenger railway markets in the German state of Baden-Württemberg. We compare the evolution of the frequency of service on lines that were exposed to competition for the market with lines procured by direct negotiations with the incumbent. Our results suggest that the competitively procured lines enjoyed a stronger growth of the frequency of service than those that were not procured competitively, even after controlling for various line characteristics that might have had an independent influence on the frequency of service. Our results further suggest that the effects of competition may depend strongly on the operator.

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Infrastructure quality in deregulated industries: is there an underinvestment problem?

Cited by 53 publications

References 6 publications

Access price regulation, investment and entry in telecommunications

Access price regulation, investment and entry in telecommunications

Optimal replacement strategies in network infrastructures under quality penalties

Exploring the effects of competition for railway markets

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