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| Author: | Wolinsky, A. |
| Title: | Regulation of Duopoly: Managed Competition vs Regulated Monopolies |
| Journal: | Journal of Economics and Management Strategy
1997 : Vol. 6:4, p. 821-847 |
| Index terms: | DUOPOLY MONOPOLY COMPETITION |
| Language: | eng |
| Abstract: | This paper discusses the regulation of oligopolistic differentiated-product industries. The regulator can control prices and impose quantity restrictions, but cannot control the quality choices of the firms. We inquire about the optimal choice of regulatory regime - whether and under what conditions managed competition or segmentation of the market between regulated monopolies achieves better results. In the spatial duopoly model analyzed here, unhindered competition generally results in an inefficient allocation. When the regulator knows the technologies, optimal managed competition results in distortions of the quality choice, but an optimal regulated-monopolies regime achieves the first best outcome. |
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