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service) is subject to regulation. In these industries, regulators are confronted with the potential exercise of market power … by the upstream affiliate when choosing the optimal form of downstream regulation. This paper finds that downstream … regulation in the form of price caps can eliminate the exercise of market power by the regulated firm's upstream affiliate. With …
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The buyer solicits bids from suppliers with different cost distributions defined by their capacities. The expected market share of each supplier is the ratio of its capacity to the industry capacity. The buyer's optimal reserve price declines with increases in the concentration of the industry....
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