Pricing to preclude sabotage in regulated industries
International Journal of Industrial Organization
We characterize the optimal access price and retail price for a vertically-integrated incumbent supplier (V) that faces limited competition from a new entrant in the retail sector. The optimal prices provide V with a relatively high wholesale profit margin and a relatively low retail profit margin. Consequently, V has no incentive to raise the costs of its retail rival.
Bose, Arup; Pal, Debashis; and Sappington, David E.M., "Pricing to preclude sabotage in regulated industries" (2017). Journal Articles. 2666.