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Ekonomska teorija in ex ante regulacija (Economic Theory and Ex Ante Regulation)

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Author(s): Aleš Ferčič

Journal: LeXonomica : Journal of Law and Economics
ISSN 1855-7147

Volume: I;
Issue: 1;
Start page: 33;
Date: 2009;
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Keywords: liberalization | ex ante regulation | natural monopoly | sunk costs | bottleneck | essential facilities | contestable markets | network effects | switching costs

ABSTRACT
In this article the author deals with the question in which cases the state or its competent regulatory body should perform ex ante regulation on 'liberalized' infrastructure markets. The author for this purpose applies economic theory as an instrument for assessing merits of ex ante regulation. The author in this regard ascertains that ex ante regulation means intensive public authority intervention on the market, which should be applied only exceptionally in a market economy. A typical example when ex ante regulation should be performed, is the so called bottleneck situation, i.e., a situation when two cumulative conditions are met. Namely, when there is an infrastructure indispensable for business activities on the downstream market but there is no active substitute because of a natural monopoly effect, and when there is no potential substitute that would discipline the owner of the sole infrastructure because of sunk costs.

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