Cross-Subsidization and Competition: A Case Study of Gas and Electric Utility Involvement in Residential Energy Conservation

摘要

Frequently profits from one level of operation or in one product line are used by vertically integrated or conglomerate firms to subsidize sales made at another level or in another industry. This permits price cutting which can drive small firms out of business. This study will include the development of a theoretical model of firm behavior on potential gains versus losses from cross subsidization. The model will be tested using data on the sale of home insulation materials and services by electric and gas companies.