Pricing Dynamics of Network Utilities in Developing Countries
This paper examines the pricing of a utility with an underdeveloped network facing a competitive fringe, short-run network adjustment costs, theft of service, and the threat of retaliatory government intervention that is increasing with the price it charges. Under a variety of plausible assumptions (in the context of developing countries) the utility will find its long-run profits enhanced if it exercises pricing restraint in the early stages of network development. These findings provide some useful insights for the design of post-privatization regulatory governance in developing countries where years of price controls have contributed to choking off investment in network expansion.
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| Main Authors: | , |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2009
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| Subjects: | Network Formation and Analysis: Theory D850, Transactional Relationships, Contracts and Reputation, Networks L140, Utilities: General L970, |
| Online Access: | http://hdl.handle.net/10986/5524 |
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