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Competition policy, regulation and the institutional design of industry supervision

Published online by Cambridge University Press:  17 August 2016

Cécile Aubert  and
Jérôme Pouyet
Cécile Aubert
Affiliation:
GREMAQ
Jérôme Pouyet
Affiliation:
CORE-UCL and CERAS-ENPC
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Summary

We study the welfare impact of enforcing a competitive behavior from an unregulated fringe competing with a regulated dominant operator, with imperfectly differentiated goods. The fringe is potentially collusive but may be supervised by a competition authority. We show that the complementarity/substitutability between regulation and competition policy strongly depends on the nature of the market interaction.

Forcing the fringe to adopt a competitive behavior always benefits consumers. However, it also affects the amount of subsidy that must be provided to the regulated firm for cost-reimbursement purposes, which has a social cost when public funds are costly. With complements, antitrust intervention is always welfare-improving. It is also preferable with weak substitutes, but is detrimental to welfare for strong substitutes.

Résumé

Résumé

Nous étudions l'impact de la surveillance, par une autorité de la concurrence, d'une frange en concurrence avec un opérateur dominant régulé. La frange, non régulée et potentiellement collusive, produit un bien imparfaitement différencié de celui de l'opérateur. Lacomplémentarité/substituabilité entre régulation et politique de la concurrence dépend de la nature de l'interaction au niveau des marchés.

S'assurer que la frange se comporte de façon compétitive améliore toujours le bien-être des consommateurs. Cependant, cela affecte aussi le montant de subvention à l'opérateur régulé, subvention socialement coûteuse. Lorsque les biens sont compléments ou faiblement substituables, l'intervention par une autorité de la concurrence améliore le bien-être social. Cette intervention est par contre néfaste pour des biens fortement substituables.

Keywords

RégulationPolitique de la concurrenceL40L51RegulationCompetition policyL40L51
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 70 , Issue 2 , 2004 , pp. 153 - 168
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2004 

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Footnotes

*

We are indebted to Jean-Jacques Laffont for stimulating and clarifying discussions during this work. We gratefully acknowledge comments and useful suggestions made by two anonymous referees. The usual disclaimer applies.

**

GREMAQ (UMR 5603 CNRS), Manufacture des Tabacs, 21 Allée de Brienne 31000 Toulouse, France.

***

Corresponding author. CORE-UCL, 34 Voie du Roman Pays, 1348 Louvain-la-Neuve, Belgium and CERASENPC (URA 2036 CNRS), 28 rue des Saints-Pères, 75007 Paris, France. Phone number:32(10)474319. E-mail address: pouyet@core.ucl.ac.be

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