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Ex-ante margin squeeze tests in the telecommunications industry: What is a reasonably efficient operator? (Revised: September 6, 2012)

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  • Gaudin, Germain
  • Saavedra Valenzuela, Claudia
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    Abstract

    In this paper, we study the adjustments made by National Regulatory Authorities to simple margin squeeze tests, in order to model a reasonably efficient operator. More precisely, by inspecting the possible differences between an entrant and an incumbent that would cause a market disadvantage for the former, we provide a formal economic framework that translates these ex-ante disadvantages into practical test adjustments. We identify five possible adjustments relevant to ex-ante margin squeeze tests, on the cost, the access charge, or the price parameters. We then review the implementation of margin squeeze tests by European telecommunications National Regulatory Authorities according to these adjustments, as to build a comparable benchmark of implementation choices. --

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    Bibliographic Info

    Paper provided by International Telecommunications Society (ITS) in its series 23rd European Regional ITS Conference, Vienna 2012 with number 62157.

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    Date of creation: 2012
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    Handle: RePEc:zbw:itse12:62157

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    Web page: http://www.itseurope.org/

    Related research

    Keywords: Margin squeeze; Imputation test; Access regulation; Telecommunications;

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    1. Briglauer, Wolfgang & Vogelsang, Ingo, 2011. "The need for a new approach to regulating fixed networks," Telecommunications Policy, Elsevier, vol. 35(2), pages 102-114, March.
    2. 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.
    3. Dennis W. Carlton & Michael Waldman, 1998. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," NBER Working Papers 6831, National Bureau of Economic Research, Inc.
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