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Access Pricing Under Imperfect Competition Reconsidered

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  • Michal KvasniÄka

    ()
    (Masaryk University, Economic Faculty, Lipová 41a, Brno, 602 00, the Czech Republic)

  • Rostislav StanÄ›k

    ()
    (Masaryk University, Economic Faculty, Lipová 41a, Brno, 602 00, the Czech Republic)

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    Abstract

    This paper claims that Onemli’s results published in “Access Pricing under Imperfect Competitionâ€, Review of Economic Perspectives, 2012, are incorrect. Contrary to Onemli, we claim that in an industry, where a monopoly incumbent produces a key input used by itself and its competitors on a downstream market which is Cournot oligopoly, the regulator should set the second-best access charge such that the incumbent’s total profit is zero if the first-best access charge is not feasible. The competitors’ ability to produce the key input themselves does not change the outcome since no competitor chooses to use this option under this regulation. We also discuss some limitations of the Onemli’s model.

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    File URL: http://is.muni.cz/do/econ/soubory/aktivity/obzor/6182612/37711507/2012_4_2_StanekKvasnicka.pdf
    File Function: First version, 2012
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    Bibliographic Info

    Article provided by Faculty of Economics and Administration, Department of Economics in its journal Review of Economic Perspectives.

    Volume (Year): 12 (2012)
    Issue (Month): 4 (December)
    Pages: 223-234

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    Handle: RePEc:nho:journl:v:12:y:2012:i:4:p:223-234

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    Related research

    Keywords: Cournot oligopoly; monopoly; second-best optimal access charge; Regulation;

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