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Pricing access in network competition

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  • Sue Mialon

Abstract

We compare various access pricing rules in the two-way access model. We show that the Generalized Efficient Component Pricing Rule (TECPR) leads to a lower equilibrium price than does the Efficient Component Pricing Rule, (ECPR) marginal cost pricing, (MCP) and any non-negative fixed access charges. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Sue Mialon, 2007. "Pricing access in network competition," Journal of Regulatory Economics, Springer, vol. 31(1), pages 109-123, February.
    • Handle: RePEc:kap:regeco:v:31:y:2007:i:1:p:109-123
    DOI: 10.1007/s11149-006-9009-5
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
    2. Panzar, J. C. & Sibley, D. S., 1989. "Optimal two-part tariffs for inputs : The case of imperfect competition," Journal of Public Economics, Elsevier, vol. 40(2), pages 237-249, November.
    3. Mark Armstrong & John Vickers, 1998. "The Access Pricing Problem with Deregulation: A Note," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 115-121, March.
    4. repec:bla:jindec:v:46:y:1998:i:1:p:115-21 is not listed on IDEAS
    5. Nicholas Economides & Lawrence J. White, 1995. "Access and Interconnection Pricing: How Efficient is the Efficient Component Pricing Rule?," Working Papers 95-04, New York University, Leonard N. Stern School of Business, Department of Economics.
    6. Berger, Ulrich, 2005. "Bill-and-keep vs. cost-based access pricing revisited," Economics Letters, Elsevier, vol. 86(1), pages 107-112, January.
    7. Dessein, Wouter, 2003. "Network Competition in Nonlinear Pricing," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 593-611, Winter.
    8. John Vickers, 1995. "Competition and Regulation in Vertically Related Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(1), pages 1-17.
    9. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    10. Cambini, Carlo & Valletti, Tommaso M., 2003. "Network competition with price discrimination: 'bill-and-keep' is not so bad after all," Economics Letters, Elsevier, vol. 81(2), pages 205-213, November.
    11. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-564, May.
    12. Hahn, Jong-Hee, 2004. "Network competition and interconnection with heterogeneous subscribers," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 611-631, May.
    13. Gans, Joshua S. & King, Stephen P., 2001. "Using 'bill and keep' interconnect arrangements to soften network competition," Economics Letters, Elsevier, vol. 71(3), pages 413-420, June.
    14. David S. Sibley & Michael J. Doane & Michael A. Williams & Shu‐Yi Tsai, 2004. "Pricing Access to a Monopoly Input," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(4), pages 541-555, October.
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    Cited by:

    1. Dominik Schober, 2013. "Refinancing under Yardstick Regulation with Investment Cycles–The Case of Long-Lived Electricity Network Assets," EWL Working Papers 1321, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Jun 2013.
    2. Schober, Dominik & Weber, Christoph, 2015. "Refinancing under yardstick regulation with investment cycles: The case of long-lived electricity network assets," ZEW Discussion Papers 15-065, ZEW - Leibniz Centre for European Economic Research.
    3. Doh-Shin Jeon & Sjaak Hurkens, 2007. "A retail benchmarking approach to efficient two-way access pricing," Economics Working Papers 1055, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Doh‐Shin Jeon & Sjaak Hurkens, 2008. "A retail benchmarking approach to efficient two‐way access pricing: no termination‐based price discrimination†," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 822-849, September.
    5. Doh-Shin Jeon & Sjaak Hurkens, 2007. "A Retail Benchmarking Approach to Efficient Two-way Access Pricing: Two-Part Tariffs," Working Papers 07-11, NET Institute, revised Sep 2007.

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    More about this item

    Keywords

    Access pricing; Incentive regulation; L51; L96; L11;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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