Access Profit-Sharing Regulation with Information Transmission and Acquisition

The paper analyses how information acquisition and transmission issues affect the determination of the optimal access pro.t-sharing plan in regulated network industries. It considers a regulated upstream monopoly with cost uncertainty and a downstream unregulated duopoly. It will be shown that, under an access price cap regulatory mechanism, the transfer of a sufficiently high share of access profits to consumers induces an integrated upstream monopolist to transmit to his downstream rival the information privately acquired on the upstream cost and this, in turn, may negatively affect welfare. On account of these effects the optimal access profit-sharing plan will depend on the variance and shape of cost distribution, on information acquisition costs as well as on the regulator’s redistributive concerns.Access price cap regulation, profit-sharing, information transmission and acquisition

Access Price Cap Mechanisms and Industry Structure with Information Acquisition

This paper considers a network industry characterized by an upstream natural monopoly with cost uncertainty, regulated through an access price mechanism, and an unregulated downstream market with Cournot competition. The upstream monopolist can acquire information on the upstream cost while the information acquisition is prohibitively costly for the regulator and downstream firms. The information acquisition is also unobservable. I investigate how the presence of costly and socially valuable information on the upstream cost affects the desirability of allowing the upstream monopolist to produce in the downstream market (integration) rather than excluding it (separation). I show that when the upstream monopolist is regulated only through an access price cap, the information acquisition problem provides an argument in favour of vertical integration. However, when the regulator also obliges the upstream monopolist to share her access profits with consumers, a bias emerges in favour of separation via the impact of the access-profit sharing plan on the upstream monopolist's incentives to transmit information to her rival in the downstream market.access price cap mechanisms, integration, separation, information acquisition.

Vertical integration and costly demand information in regulated network industries

We study how vertical integration in regulated network industries affects the acquisition and transmission of socially valuable information on demand. We consider a regulated upstream monopoly with downstream unregulated Cournot competition and demand uncertainty. Demand information serves to set the access price and to foster competition in the unregulated segment but demand realizations can be observed at some cost only by the upstream monopolist; information acquisition is also unobservable. We show that vertical integration favours acquisition of demand information because of the transmission of information generated by the public nature of the regulatory mechanism. This holds both when access to information is easier for the upstream firm and when it is easier for downstream firms

Integration and Separation with Costly Demand Information

We consider an industry characterized by a regulated natural monopoly in the upstream market and Cournot competition with demand uncertainty in the unregulated downstream market. The realization of demand cannot be observed by the regulator, whilst it can be privately observed at some cost by the upstream monopolist. Information acquisition is also unobservable. We study whether it is better to allow the monopolist to operate in the downstream market (integration) or instead to exclude it (separation). We show that asymmetric information on demand favours separation but unobservability of information acquisition favours integration.Information acquisition, liberalization and separation

Integration and Separation with Costly Demand Information

We consider an industry characterized by a regulated natural monopoly in the upstream market and Cournot competition with demand uncertainty in the unregulated downstream market. The realization of demand cannot be observed by the regulator, whilst it can be privately observed at some cost by the upstream monopolist. Information acquisition is also unobservable. We study whether it is better to allow the monopolist to operate in the downstream market (integration) or instead to exclude it (separation). We show that asymmetric information on demand favours separation but unobservability of information acquisition favours integration.Information acquisition, liberalization and separation

A boundary regularity result for minimizers of variational integrals with nonstandard growth

We prove global Lipschitz regularity for a wide class of convex variational integrals among all functions in $W^{1,1}$ with prescribed (sufficiently regular) boundary values, which are not assumed to satisfy any geometrical constraint (as for example bounded slope condition). Furthermore, we do not assume any restrictive assumption on the geometry of the domain and the result is valid for all sufficiently smooth domains. The result is achieved with a suitable approximation of the functional together with a new construction of appropriate barrier functions.Comment: arXiv admin note: text overlap with arXiv:1310.6845 by other author

Access price cap mechanisms and industry structure with information acquisition

This paper tackles the issue of the welfare desirability of downstream integration versus separation when facing the problem of socially valuable information acquisition on the upstream cost in regulated network industries. I consider an upstream natural monopoly with cost uncertainty, regulated through an access price cap mechanism, and a downstream unregulated Cournot competition. Cost information improves the performance of the regulatory mechanism but it can only be acquired by the monopolist; the information acquisition is unobservable. I show that the access price cap mechanism provides a vertically integrated firm with greater incentives to acquire information and this favours integration

Orlicz-Sobolev nematic elastomers

We extend the existence theorems in Barchiesi et al. (2017), for models of nematic elastomers and magnetoelasticity, to a larger class in the scale of Orlicz spaces. These models consider both an elastic term where a polyconvex energy density is composed with an unknown state variable defined in the deformed configuration, and a functional corresponding to the nematic energy (or the exchange and magnetostatic energies in magnetoelasticity) where the energy density is integrated over the deformed configuration. In order to obtain the desired compactness and lower semicontinuity, we show that the regularity requirement that maps create no new surface can still be imposed when the gradients are in an Orlicz class with an integrability just above the space dimension minus one

Vertical integration and costly demand information in regulated network industries

We study how vertical integration affects the acquisition and transmission of demand information in regulated network industries. Demand information helps to set the access price, incentivize infrastructure investment, and foster competition in the unregulated downstream market. We show that when demand information is costly and private, the optimal access prices are independent of demand levels. Vertical integration then secures greater welfare in new markets where little demand information is available or where infrastructure cost is low, or when investing is highly risky. In the remaining cases, vertical separation is preferable