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The Inefficiency of the ECPR Yet Again: A Reply to Larson

Listed author(s):
  • Nicholas Economides

    (Stern School of Business - New York University & Center for Economic Policy Research - Stanford University)

  • Lawrence J. White

    (Stern School of Business - New York University)

We extend the results of our article, "Access and Interconnection Pricing? How Efficient Is the "Efficient Component Pricing Rule?," Antitrust Bulletin (1995). In the presence of a monopolized essential input, we show that application of the Efficient Component Pricing Rule ("ECPR") in pricing this input to downstream competitors perpetuates monopoly distortions and high prices of final goods services. We show these results for various demand conditions, including conditions that are accepted to hold in the telecommunications sector. We also respond to various criticisms raised by A. Larson in "The Efficiency of the Efficient-Component-Pricing Rule: A Comment," Antitrust Bulletin, (this issue) (1997).

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Paper provided by EconWPA in its series Industrial Organization with number 9703001.

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Length: 19 pages
Date of creation: 04 Mar 1997
Handle: RePEc:wpa:wuwpio:9703001
Note: Type of Document - PDF/PostScript; prepared on IBM PC; to print on HP; pages: 19; figures: included. Forthcoming, Antitrust Bulletin, (1997)
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