Access Pricing: A Comparison Between Full Deregulation and Two Alternative Instruments of Access Price Regulation, Cost-Based and Retail-Minus
AbstractIn this paper we compare two instruments of access price regulation, cost-based and retail-minus, with the full deregulation hypothesis. We consider an upstream monopolist firm that sells a vital input to an independent firm and to a subsidiary firm in the downstream market. We conclude that the retail-minus regulation avoids foreclosure and leads to better results than cost-based regulation in terms of investment level and consumer surplus. Moreover, retail-minus regulation allows a higher consumer surplus than deregulation of access price as long as the regulator carefully defines the retail-minus instrument. We also compare retail-minus regulation with the Efficient Component Pricing Rule and we conclude that the two mechanisms can lead to different results.
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Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 0603.
Length: 39 pages
Date of creation: Mar 2006
Date of revision:
access regulation; vertical integration; retail-minus; Efficient Component Pricing Rule;
Other versions of this item:
- Sarmento, Paula & Brandão, António, 2007. "Access pricing: A comparison between full deregulation and two alternative instruments of access price regulation, cost-based and retail-minus," Telecommunications Policy, Elsevier, vol. 31(5), pages 236-250, June.
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-29 (All new papers)
- NEP-COM-2006-04-29 (Industrial Competition)
- NEP-MIC-2006-04-29 (Microeconomics)
- NEP-REG-2006-04-29 (Regulation)
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