Footloose Monopolies: Regulating a 'National Champion'

36 Pages Posted: 26 Oct 2009

See all articles by Giacomo Calzolari

Giacomo Calzolari

European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR); University of Bologna

Carlo Scarpa

University of Brescia; NERA Economic Consulting

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Abstract

We analyze the design of optimal regulation of a domestic monopolist that also competes in an unregulated foreign market. We show how foreign activities affect regulation, consumers' surplus, national welfare, and firm's profits. Although expansion in unregulated foreign markets amplifies the distortions that are caused by the regulator's limited information, we also show that allowing the firm to compete abroad does not necessarily harm domestic consumers. We analyze if and when the firm's decision to expand abroad coincides with national interests.

Suggested Citation

Calzolari, Giacomo and Scarpa, Carlo, Footloose Monopolies: Regulating a 'National Champion'. Journal of Economics & Management Strategy, Vol. 18, Issue 4, pp. 1179-1214, Winter 2009. Available at SSRN: https://ssrn.com/abstract=1492382 or http://dx.doi.org/10.1111/j.1530-9134.2009.00242.x

Giacomo Calzolari (Contact Author)

European University Institute - Economics Department (ECO) ( email )

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Carlo Scarpa

University of Brescia ( email )

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NERA Economic Consulting ( email )

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