Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 31, 2007 erstellt
Description:
This paper investigates the conditions that lead to the so-called 'waterbed' effect in the context of price regulation. This is the effect whereby regulation of one of the prices of a multiproduct firm causes one or more of its other unregulated prices to change as a result of the firm's profit-maximising behaviour. A waterbed effect is shown to arise when demands and/or marginal costs are interdependent, firms use nonlinear pricing, or there is a zero-profit constraint or global price cap. Some implications for market definition, welfare analysis of regulation, non-price competition, collusion and two-sided markets are also discussed, as well as specific applications to fixed-to-mobile termination and bank overcharges