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Pricing Third-Party Access to Essential Facilities under Asymmetric Information

Author

Listed:
  • Seok Yang

    (University of Seoul)

  • Myeonghwan Cho

    (University of Seoul)

Abstract

We investigate a market wherein a dominant firm owns an essential facility and other firms use this facility by paying an access fee. Loss in social welfare occurs regardless of whether the cost of operating the essential facility is public or private information to the dominant firm. The government can improve social welfare by regulating the access fee, but it has limitations in improving social welfare when the cost of operating the essential facility is private information to the dominant firm. An appropriate tax-subsidy scheme can resolve the limitations by inducing the dominant firm to disclose its private information completely.

Suggested Citation

  • Seok Yang & Myeonghwan Cho, 2024. "Pricing Third-Party Access to Essential Facilities under Asymmetric Information," Korean Economic Review, Korean Economic Association, vol. 40, pages 315-348.
    • Handle: RePEc:kea:keappr:ker-20240701-40-2-04
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Third-party access; Essential facility; Asymmetric information;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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