Efficient Access Pricing and Endogenous Market Structure
We analyze a model of regulated competition in differentiated retail goods and services between an incumbent firm, who owns a network good (an essential input) and a potential entrant, whose cost of production is private information. The regulator sets the retail prices and the access charge that the entrant pays to the incumbent. The decision of the (potential) competitor to enter the retail market crucially depends on the regulatory mechanism, and consequently the market structure is endogenous. We analyze the efficient mechanism that gives rise to a set of “modified” Ramsey prices. We derive a cut-off level of entrant’s marginal cost below which the induced market is a duopoly. We show that, under a linear demand system, there is inefficient entry compared to the social optimum.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: + 32 (0) 4 366 31 08
Fax: + 32 (0) 4 366 31 06
Web page: http://www2.ulg.ac.be/crepp/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Axel Gautier & Manipushpak Mitra, 2008.
"Regulation of an Open Access Essential Facility,"
London School of Economics and Political Science, vol. 75(300), pages 662-682, November.
- GAUTIER, Axel & MITRA, Manipushpak, 2003. "Regulation of an open access essential facility," CORE Discussion Papers 2003084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Axel Gautier & Manipushpak Mitra, 2003. "Regulation of an Open Access Essential Facility," Bonn Econ Discussion Papers bgse19_2003, University of Bonn, Germany.
- GAUTIER, Axel & MITRA, Manipushpak, . "Regulation of an open access essential facility," CORE Discussion Papers RP -2053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jean-Jacques Laffont & Jean Tirole, 1994.
"Access Pricing and Competition,"
94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
- Laffont, Jean-Jacques & Tirole, Jean, 1992. "Access Pricing and Competition," IDEI Working Papers 19, Institut d'Économie Industrielle (IDEI), Toulouse.
- J-J. Laffont & J. Tirole, 1994. "Access Pricing and Competition," Working papers 95-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Lewis, Tracy R. & Sappington, David E. M., 1999. "Access pricing with unregulated downstream competition," Information Economics and Policy, Elsevier, vol. 11(1), pages 73-100, March.
When requesting a correction, please mention this item's handle: RePEc:rpp:wpaper:0802. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mathieu Lefebvre)
If references are entirely missing, you can add them using this form.