Strategic pre-emption in deregulating and liberalizing markets through alliances and mergers

In this paper we consider an incumbent firm owning or controlling access to network infrastructure. Initially the market is considered regulated but will be open to competition at some point in the future. In many cases after a market or industry is deregulated, the incumbent firms may be required to provide access to entrant firms under a preset regulatory access fee. The purpose is to achieve an improvement in economic efficiency in the market more quickly and to establish the conditions for a change in market structure by inviting entry and investment. Once deregulation of an industry is announced, the incumbent firm may not be able to offset the requirement to grant access by contracting or merging with an entrant firm due to antitrust policies. Before deregulation, the incumbent firm can contract with those firms who can be seen as credibly entering the market after deregulation. The motivation of the incumbent firm is to reduce the possibility of potential entrants in the future which is equivalent to sacrificing some market share today to have more market power tomorrow.

• Authors:
  • Gillen, D
  • Hasheminia, H
• Conference:
  • International Transport Economics Conference (ITrEC), 2009, Minneapolis, Minnesota, USA
• Publication Date: 2009-6

Language

• English

Media Info

• Pagination: 32p
• Monograph Title: Joint carrier-receiver response to cordon pricing, time-distance pricing, and comprehensive carrier-receiver policies

Subject/Index Terms

• TRT Terms: Deregulation; Economics; Infrastructure; Transportation operations
• ATRI Terms: Competition; Deregulation; Infrastructure; Transport economics; Transport network
• Subject Areas: Economics;

Filing Info

• Accession Number: 01384435
• Record Type: Publication
• Source Agency: ARRB
• Files: ATRI
• Created Date: Aug 22 2012 4:35PM