Access Regulation for Naturally Monopolistic... (ERIM Ph.D. Series Research...) by Enzo Fabrizio Defilippi...

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The access problem arises in industries where services are produced using inputs from both monopolistic and competitive markets. In the port industry, a number of services need to be jointly provided to complete the logistics chain: pilotage, towage, stevedoring, storage, etc. In ports where a... read more

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The problem of access arises in industries where inputs from monopolistic and competitive markets are complementarily needed to provide a service. In these circumstances, the firm controlling the monopolistic segment has incentives to deter competition in the competitive segments (markets) to recover profits foregone by regulation (Paredes, 1997). In the port industry, for example, a number of services need to be jointly provided to complete the logistics chain: pilotage, towage, stevedoring, storage, etc. Without any of these, cargo cannot be delivered. In ports where a terminal constitutes a natural monopoly, an integrated terminal operator has incentives to deter competition in the markets of services that are necessary to complete the logistics chain, since this would allow him to charge disproportionate prices and extract monopolistic rents. This strategy can be implemented by preferential treatment to itself or sister companies, or by restricting competitors access to the terminal. To avoid such situations from occurring, regulators have two options. They can either (i) forbid integration between terminal operators and carriers or, (ii) establish a framework under which all service providers are allowed to access and use the terminal under reasonable conditions. As suggested by Vickers (1995), the first option (vertical separation) may create non-trivial transaction costs that result in higher prices for the consumers, for which the second option (the implementation of access policies) constitutes a more desirable policy. However, formulating access policies is not an easy task. If access conditions are too high, a limited number of entrants will use the terminal, allowing providers to obtain economic rents. If conditions are too relaxed, an excess of entry may occur, thus reducing the terminal operator’s incentives to adequately maintain and expand the infrastructure (Laffont and Tirole 1994). The objective of this thesis is to analyze the characteristics of access policies implemented in the telecommunications, electricity supply, natural gas and railways industries, and to use the lessons learned from these experiences to propose a model suitable for the port industry.

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First Sentence edit see section history

During the last 50 years, trade in finished goods, components and services has been growing faster than the world’s GDP; a trend that is expected to continue in the future (Kumar and Hoffman, 2002).

Glossary edit see section history

ACCC: Australian Consumer and Competition Commission
BG: British Gas
ARTC: Australian Rail Track Corporation
AER: Australian Energy Regulator
BR: British Rail
BT: British Telecom
ECPR: Efficient Component Pricing Rule
ECMT: European Conference of Ministers of Transport
CLEC: Competitive Local Exchange Company
EFD: Essential Facilities Doctrine
EU: European Union
FCC: Federal Communications Commission
FDC: Fully Distributed Costs
Ferc: Federal Energy Regulatory Commission
ICCC: Independent Consumer and Competition Commission (Papua New Guinea)
ISO: Independent System Operator
IXC: Long Distance Carriers
kV: Kilovolts
kW: Kilowatt
LATA: Local Access Transport Areas
LDC: Local Distribution Company
LNG: Liquid Natural Gas
LLU: Local Loop Unbundling
LEC: Local Exchange Company
LRIC: Long Run Incremental Costs
LRMC: Long Run Marginal Costs
MMC: Monopolies and Mergers Commission
MW: Megawatt
NCC: National Competition Council
NECA: National Electricity Code Administrator
NEM: National Electricity Market
Nemmco: National Electricity Market Management Company
NETA: New Electricity Trading Arrangements
NGC: National Grid Company
NLC: Nederlandse Loodsen Corporatie
OECD: Organization for Economic Cooperation and Development
Ofcom: Office of Communications
Ofgas: Office of Gas Supply
Ofgem: Office of Gas and Electricity Markets
OFT: Office of Fair Trading

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Series & Lists edit see section history

This book is in ERIM Ph.D. Series Research in Management. (standard series)

Authors & Contributors edit see section history

Enzo Fabrizio Defilippi Angeldonis (Author)

First Edition edit see section history

Original Language: English
Publisher: ERIM
Country: DUTCH
Publication Date: 2010
ISBN: 9789058922458
Page Count: 301

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Access Regulation for Naturally Monopolistic Port Terminals (2010) (edit title/settings)

by Enzo Fabrizio Defilippi Angeldonis (Author) (edit contributors)