Access Pricing Under Imperfect Competition Reconsidered
AbstractThis paper claims that Onemliâ€™s results published in â€œAccess 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 incumbentâ€™s total profit is zero if the first-best access charge is not feasible. The competitorsâ€™ 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 Onemliâ€™s model.
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Bibliographic InfoArticle 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)
Find related papers by JEL classification:
- L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
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