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Entry and Component Pricing in Regulated Markets

Author

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  • M. Dobbs Ian
  • Paul Richards

Abstract

This paper discusses work on computable models of entry into regulated markets. Cournot, Stackelberg and Fringe entry are considered for the case where the incumbent operator's profitability is regulated and component pricing influences the desirability of entry. The simulation results illustrate that welfare optimal component pricing can be highly sensitive to model specification (behavioural assumptions about agents, the nature of competition, the extent of product differentiation etc.) and that no welfare ranking of simple component pricing rules (such as marginal cost, average cost, opportunity cost or efficient component price) exists. In addition, the welfare desirability of entry is seen to be sensitive to the choice of welfare benchmark for comparison

Suggested Citation

  • M. Dobbs Ian & Paul Richards, 1994. "Entry and Component Pricing in Regulated Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(3), pages 355-376.
    • Handle: RePEc:taf:ijecbs:v:1:y:1994:i:3:p:355-376
    DOI: 10.1080/758536227
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
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    More about this item

    Keywords

    Component pricing; Network access pricing; Entry; Regulation; Oligopoly; JEL classifications:D43; L40; L51; L90; L98;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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