2006 Fiscal Year Final Research Report Summary
Research on Industrial Organization of Markets with Common Use of Network Facilities
| Project/Area Number |
17530198
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Applied economics
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| Research Institution | Kwansei Gakuin University |
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Principal Investigator |
MIZUNO Keizo Kwansei Gakuin University, School of Business Administration, Professor, 商学部, 教授 (40229703)
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| Co-Investigator(Kenkyū-buntansha) |
DOMON Koji Waseda University, School of Social Sciences, Professor, 社会科学部, 教授 (00264995)
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| Project Period (FY) |
2005 – 2006
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| Keywords | Open Access / Access (Wheel) Charge / Coalition Formation / Market Convergence / Network Investment |
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| Research Abstract |
2005
(1)A theoretical analysis on incentives for infrastructure construction and wheel charge under uncertainty
The followings are assumed in the model ; (i) uncertainty exists, (ii) a firm determines an infrastructure project, whereas a regulator determines the level of access charge, and (iii) a coverage expansion of infrastructure has a demand-enhancing effect.
The main finding is as follows. Given a level of access charge, the infrastructure is under-constructed as its demand-enhancing effect is large or the level of uncertainty is small. In that case, the regulator should raise the level of access charge. On the other hand, the infrastructure is over-constructed as the operation cost for the infrastructure is large. Then, the regulator should lower the level of access charge.
2006
(1)Incentives for coalition formation among firms in an open access environment
Applying a sequential coalition formation game to a market in open access environment, we analyzed two cases, i.e., the case wher
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e coalition formation has a cost-reducing effect and the case where it has a demand-enhancing effect. In the case where coalition formation has a cost-reducing effect, a first mover has an incentive to form a grand coalition when access charge is sufficiently high or sufficiently low. On the other hand, when the level of access charge is in an intermediate range, it has an incentive to form a partial coalition and the other firms access the coalition. In the case where coalition formation has a demand-enhancing effect, a first mover has an incentive to form a grand coalition when the degree of demand complementarity is large or the degree of demand-enhancing effect is large.
(2)The relationship between wheel charge and incentives for network investment
When multiple markets converge, firms in each market have an opportunity to enter the other markets. Focusing on this type of potential entry, we analyze a firm's incentive for infrastructure investment in market-converging environment. As a benchmark, an incentive for infrastructure investment is examined when each market is separated. In that environment, the investment level in equilibrium can be higher or lower than the optimal level, depending on the degree of informational asymmetry, when wheel charge is set at marginal cost. When multiple markets converge, on the other hand, the investment level in equilibrium is always lower than the optimal level at marginal-cost wheel charge. From these theoretical results, we discuss an appropriate competition policy that induces infrastructure investment in open access environment. Less
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Research Products
(7 results)
