Ajay Shah: Forced unbundling for greater competition

A process of separating two industries is easier to enforce than fighting an integrated utility trying to hamper access to a new entrant

Ajay Shah

Firms always look for related lines of business, and profitable partnerships. This leads to a bundling of products and exclusive contracts. Sometimes, this raises concerns about unfair trade practices. Improving competitive conditions in the markets is a key objective for the government. There are a few situations where forcing a separation between two industries is the cleanest way to achieve more competition. This is the economic principle underlying net neutrality, where the government seeks to keep the content business separate from the pipes business. Economies of scope are about ...