Endogenous Average Cost Based Access Pricing
We analyze an endogenous average cost based access pricing rule,where both the regulated firm and its rivals realize the interdependence among their output and the regulated access price. In contrast, the existing literature on access pricing has always assumed the access price to be exogenously fixed ex-ante. We show that endogenous access pricing fully neutralizes the dominance enjoyed by the incumbent firm, and that the consumer surplus is equal to or larger than under exogenous access pricing. If the entrants are more efficient than the incumbent, then the welfare under endogenous access pricing is higher than under exogenous access pricing.
|Date of creation:||2006|
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Elsevier, vol. 38(9), pages 1673-1710, December.
- Jean-Jacques Laffont & Jean Tirole, 1994. "Access Pricing and Competition," Working papers 94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
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- Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
- Economides, Nicholas & Lopomo, Giuseppe & Woroch, Glenn, 1996. "Regulatory Pricing Rules to Neutralize Network Dominance," Industrial and Corporate Change, Oxford University Press, vol. 5(4), pages 1013-28.
- Cave, Martin & Vogelsang, Ingo, 0. "How access pricing and entry interact," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 717-727, November.
- Philippe Choné & Laurent Flochel & Anne Perrot, 1999.
"Allocating and Funding Universal Service Obligations in a Competitive Network Market,"
99-55, Centre de Recherche en Economie et Statistique.
- Philippe Chone & Laurent Flochel & Anne Perrot, 2000. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Econometric Society World Congress 2000 Contributed Papers 0213, Econometric Society.
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- Economides, N. & Lopomo, G. & Woroch, G., 1996. "Regulatory Rules to Neutralize Network Dominance," Working Papers 96-14, New York University, Leonard N. Stern School of Business, Department of Economics.
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