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The theory of access pricing : an overview for infrastructure regulators

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  • Valletti, Tommaso M.
  • Estache, Antonio

Abstract

An important component of policies to promote effective competition among all segments of network industries (such as electricity, telecommunications, or railways) is a regulatory environment guaranteeing that competitors have access to the services of potential"bottleneck"facilities too costly to duplicate. Rules covering fair access to these facilities - including fair access prices - generally improve economic efficiency by easing competition in markets both upstream and downstream from the bottleneck. Appropriate access pricing rules are especially needed when a dominant firm controls the supply of one or more inputs -- for example, gas transportation, electricity transmission, local telecommunication access, or railway track -- vital for its competitors. Access pricing is part of the antitrust concern central to the so-called essential facilities doctrine covered by U.S. legislation. It is also related broadly to such competition policy issues as quantity discounts, cross-subsidies, tie-ins, refusals to deal or unbundle, exclusive dealing, and predatory pricing. Access pricing is one of the most important and controversial questions in regulating infrastructure services. This complexity stems partly from the practical fact that access rules can be discussed only with reference to the rest of the regulatory environment, since regulators have many goals and constraints. In their survey of access pricing, the authors try to make it clear that access rules should not be assigned too many expectations. There are a few things access prices already do, however, and should continue doing until an all-encompassing solution comes along. Their survey covers access rules for both vertically unbundled and vertically integrated industries. It addresses the question: what happens if access is left unregulated? And it discusses the main challenges to implementation: calculating and allocating costs, finding a usage-based solution to the access pricing problem (the global price cap), and monitoring anticompetitive behavior (partial caps or adjusted global caps).

Suggested Citation

  • Valletti, Tommaso M. & Estache, Antonio, 1999. "The theory of access pricing : an overview for infrastructure regulators," Policy Research Working Paper Series 2097, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2097
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    Cited by:

    1. Aldaba, Rafaelita M., 2003. "Regulatory Policies and Reforms in the Power and Downstream Oil Industries," Discussion Papers DP 2003-16, Philippine Institute for Development Studies.
    2. de Braganca, Gabriel Fiuza & Rocha, Katia & Moreira, Rafael Henrique Rodrigues, 2008. "Real Options and the Regulation of Brazilian Fixed-Line Telephone Operators: The Mark-up on the Cost of Capital," Working Paper Series 3997, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    3. Tina Kao & Flavio Menezes & John Quiggin, 2014. "Optimal access regulation with downstream competition," Journal of Regulatory Economics, Springer, vol. 45(1), pages 75-93, February.
    4. Gustavo Ferro & Omar Chisari, 2010. "Tópicos de Economía de la Regulación de los Servicios Públicos," Working Papers hal-00473038, HAL.
    5. Ben Dkhil, Inès, 2014. "Competition in the Fixed Telecommunication Market Segment: Challenges and Theories," MPRA Paper 72909, University Library of Munich, Germany.
    6. Kurakawa, Yukihide, 2013. "The optimal vertical structure in the electricity industry when the incumbent has a cost advantage," Energy Policy, Elsevier, vol. 63(C), pages 622-627.
    7. Christian Desmaris, 2016. "High Speed Rail Competition in Italy: A Major Railway Reform with a “Win-Win Game”?," International Transport Forum Discussion Papers 2016/11, OECD Publishing.
    8. Bickenbach, Frank, 2000. "Regulation of Europe's network industries: the perspective of the new economic theory of federalism," Kiel Working Papers 977, Kiel Institute for the World Economy (IfW).
    9. Giovannetti, Emanuele, 2002. "Interconnection, differentiation and bottlenecks in the Internet," Information Economics and Policy, Elsevier, vol. 14(3), pages 385-404, September.
    10. Kenneth Fjell & Debashis Pal & David Sappington, 2013. "On the performance of endogenous access pricing," Journal of Regulatory Economics, Springer, vol. 44(3), pages 237-250, December.
    11. Markos Tselekounis & Dimitris Varoutas & Drakoulis Martakos, 2012. "On the social optimality of make-or-buy decisions," Journal of Regulatory Economics, Springer, vol. 41(2), pages 238-268, April.
    12. Gabriel Godofredo Fiuza de Bragança, 2005. "A Remuneração de Redes nas Telecomunicações e a Nova Orientação a Custos: Avaliação e Perspectivas Para a Telefonia Fixa Brasileira," Discussion Papers 1104, Instituto de Pesquisa Econômica Aplicada - IPEA.
    13. Ugo ARRIGO & Giacomo DI FOGGIA, 2014. "Theoretical And Viable Charging Models For Railway Infrastructure Access: An European Survey," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 6(2), pages 5-24, June.

    More about this item

    Keywords

    Payment Systems&Infrastructure; Economic Theory&Research; Labor Policies; Environmental Economics&Policies; Markets and Market Access; Economic Theory&Research; Environmental Economics&Policies; Markets and Market Access; Access to Markets; Knowledge Economy;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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