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Price Squeezes and Imputation Tests on Next Generation Access Networks

Author

Listed:
  • Henry ERGAS

    (Deloitte)

  • Eric RALPH

    (EKonomics LLC)

  • Emma LANIGAN

    (independent consultant)

Abstract

A vertically integrated firm that wholesales to its retail rivals can, if it has sufficient market power, set the margin between its retail and wholesale prices so as to harm its rivals. Conventionally, an imputation test is used to determine whether such behavior is being undertaken. Such tests are common in electronic communications, and the EC calls for their potentially intensive ex ante application in the supply of NGANs. This paper shows that while imputation tests are helpful analytical tools for understanding the nature of price squeezes, difficulties associated with implementation, which are sharp in an NGAN context, can make them misleading in practice. Instead, price squeezes are best dealt with through the rigorous comparison of expected outcomes, given the alleged anticompetitive behavior, with the outcomes expected in that behavior’s absence. Such analysis is not suited to ex ante application.

Suggested Citation

  • Henry ERGAS & Eric RALPH & Emma LANIGAN, 2010. "Price Squeezes and Imputation Tests on Next Generation Access Networks," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(78), pages 67-86, 2nd quart.
    • Handle: RePEc:idt:journl:cs7804
    as

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    File URL: http://repec.idate.org/RePEc/idt/journl/CS7804/CS78_ERGAS_RALPH_LANIGAN.pdf
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    References listed on IDEAS

    as
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    6. Dennis W. Carlton, 2008. "Should “Price Squeeze” Be A Recognized Form Of Anticompetitive Conduct?," Journal of Competition Law and Economics, Oxford University Press, vol. 4(2), pages 271-278.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alessandro Avenali & Anna D’Annunzio & Pierfrancesco Reverberi, 2013. "Bundling, Competition and Quality Investment: A Welfare Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 43(3), pages 221-241, November.
    2. Krämer, Jan & Schnurr, Daniel, 2018. "Margin squeeze regulation and infrastructure competition," Information Economics and Policy, Elsevier, vol. 45(C), pages 30-46.
    3. Gaudin, Germain & Saavedra Valenzuela, Claudia, 2012. "Ex-ante margin squeeze tests in the telecommunications industry: What is a reasonably efficient operator? (Revised: September 6, 2012)," 23rd European Regional ITS Conference, Vienna 2012 62157, International Telecommunications Society (ITS).
    4. Gaudiny, Germain & Saavedra Valenzuela, Claudia, 2012. "Ex-ante margin squeeze tests in the telecommunications industry: What is a reasonable efficient operator? (Revised: December 20, 2012)," 23rd European Regional ITS Conference, Vienna 2012 67955, International Telecommunications Society (ITS).
    5. Gaudin, Germain & Saavedra, Claudia, 2014. "Ex ante margin squeeze tests in the telecommunications industry: What is a reasonably efficient operator?," Telecommunications Policy, Elsevier, vol. 38(2), pages 157-172.
    6. Jaunaux, Laure & Lebourges, Marc, 2013. "Economic replicability tests for next-generation access networks," 24th European Regional ITS Conference, Florence 2013 88501, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    price squeeze; imputation tests; next generation access networks; vertical discrimination; electronic communications; regulation;
    All these keywords.

    JEL classification:

    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General

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