New publications by Prof. Matthias Finger

Abstracts & References

• Finger, Matthias & Crettenand Nicolas (2013), The alignment between institutions and technologies in network industries, Competition and Regulation in Network Industries, Vol.14, No.2, pp. 106-129.

Network industries, such as electricity, railways and air transport, are very complex technical, economic, and political systems in which the alignment between technology and institutions has a significant impact on performance. This alignment has been studied based on the coherence framework which aims to measure the alignment between technology and institutions in the case of network industries. It can be stated that technology has to be supported by institutions aligned with them (and vice versa) in order to deliver a given performance. This leads to a co-evolution between institutions and technology in network industries. This paper reviews the literature on the coherence framework, identifies its weaknesses, and contributes to the further development of the framework. It concludes with challenges for further research.

• Finger, Matthias, Lang Markus & Laperrouza, Marc (2013), Competition effects in a liberalized railway market, Journal of Industry, Competition and Trade, Vol.13, No.3, pp. 375-398.

This paper presents a game-theoretic model of a liberalized railway market, in which train operation and ownership of infrastructure are vertically separated. We analyze how the regulatory agency will optimally set the charges that operators have to pay to the infrastructure manager for access to the tracks and how these charges change with increased competition in the railway market. Our analysis shows that an increased number of competitors in the freight and/or passenger segment reduces prices per kilometer and increases total output in train kilometers. The regulatory agency reacts to more competition with a reduction in access charges in the corresponding segment. Consumers benefit through lower prices, while individual profits of each operator decrease through a higher number of competitors. We further show that the welfare effect of increased competition in the freight and/or passenger segment is ambiguous and depends on the level of competition. Finally, social welfare is higher under two-part tariffs than under one-part tariffs if raising public funds is costly to society.