TY - JOUR
T1 - Incumbent and entrant response to regulated competition: Signalling with accounting costs and market prices
AU - Otero, Jesús
AU - Price, Catherine Waddams
N1 - Funding Information:
We are grateful for financial support for this research from the Gas Consumers Council, the Energy Action Grants Agency Charitable Trust, British Gas Trading and the Leverhulme Trust (award number F215/AX). We should like to thank colleagues at the Centre for Management under Regulation and two anonymous referees of this journal for their helpful comments, and most especially Lin Fitzgerald for her very helpful suggestions. All responsibility for the analysis and interpretation of data reported here rests with the authors.
PY - 2001
Y1 - 2001
N2 - Relative prices charged by incumbents have become a strategic issue as competition is introduced into regulated markets which were previously served by a monopoly supplier. We report on the behavior of the incumbent and entrants in the residential UK gas market, where the regulator has made several investigations into whether the incumbent’s relative prices constitute undue discrimination. We identify the regulator’s policy, the strategic use of cost allocation by both the regulator and the incumbent, and the costs implied by entrants’ prices. We deduce that the entrants’ behavior provides support for the incumbent’s cost allocation arguments rather than those of the regulator.
AB - Relative prices charged by incumbents have become a strategic issue as competition is introduced into regulated markets which were previously served by a monopoly supplier. We report on the behavior of the incumbent and entrants in the residential UK gas market, where the regulator has made several investigations into whether the incumbent’s relative prices constitute undue discrimination. We identify the regulator’s policy, the strategic use of cost allocation by both the regulator and the incumbent, and the costs implied by entrants’ prices. We deduce that the entrants’ behavior provides support for the incumbent’s cost allocation arguments rather than those of the regulator.
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U2 - 10.1016/S0148-6195(00)00053-9
DO - 10.1016/S0148-6195(00)00053-9
M3 - Article
AN - SCOPUS:0004410318
SN - 0148-6195
VL - 53
SP - 209
EP - 223
JO - Journal of Economics and Business
JF - Journal of Economics and Business
IS - 2-3
ER -
