Should uniform pricing constraints be imposed on entrants?
This paper analyzes uniform pricing, coverage constraints and price caps in markets newly opened to competition, e.g. broadband services. We show that the requirement of uniform pricing has strong repercussions on coverage decisions. Imposed on incumbents only it may distort their coverage decision downward to avoid duopoly entry. If also imposed on entrants it increases the likelihood that entry leads to independent monopolies rather than competition. A sufficiently large coverage constraint on incumbents reestablishes incentives for duopoly entry, but may lead to higher prices. Copyright Springer Science+Business Media, LLC 2006
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Volume (Year): 30 (2006)
Issue (Month): 2 (08)
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- Steffen Hoernig, 2006.
"Should uniform pricing constraints be imposed on entrants?,"
Journal of Regulatory Economics,
Springer, vol. 30(2), pages 199-216, 08.
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