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The Inefficiency of the ECPR Yet Again: A Reply to Larson

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  • Nicholas Economides

    (Stern School of Business - New York University & Center for Economic Policy Research - Stanford University)

  • Lawrence J. White

    (Stern School of Business - New York University)

Abstract

We extend the results of our article, "Access and Interconnection Pricing? How Efficient Is the "Efficient Component Pricing Rule?," Antitrust Bulletin (1995). In the presence of a monopolized essential input, we show that application of the Efficient Component Pricing Rule ("ECPR") in pricing this input to downstream competitors perpetuates monopoly distortions and high prices of final goods services. We show these results for various demand conditions, including conditions that are accepted to hold in the telecommunications sector. We also respond to various criticisms raised by A. Larson in "The Efficiency of the Efficient-Component-Pricing Rule: A Comment," Antitrust Bulletin, (this issue) (1997).

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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 9703001.

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Length: 19 pages
Date of creation: 04 Mar 1997
Date of revision:
Handle: RePEc:wpa:wuwpio:9703001

Note: Type of Document - PDF/PostScript; prepared on IBM PC; to print on HP; pages: 19; figures: included. Forthcoming, Antitrust Bulletin, (1997)
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Web page: http://128.118.178.162

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Cited by:
  1. Nicholas Economides, 1995. "The Economics of Networks," Working Papers 94-24, New York University, Leonard N. Stern School of Business, Department of Economics, revised Sep 1995.
  2. Joshy Easaw, 2000. "Network Access Regulation and Competition Policy: An Assessment of the “Direct-Plus-Opportunity Costâ€\x9D Regime and Policy Options," Empirica, Springer, vol. 27(2), pages 133-156, June.
  3. Kaserman, David L. & Mayo, John W., 1999. "Regulatory policies toward local exchange companies under emerging competition: guardrails or speed bumps on the information highway?," Information Economics and Policy, Elsevier, vol. 11(4), pages 367-388, December.

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