Access Pricing Under Imperfect Competition Reconsidered



Year of publication 2012
Type Article in Periodical
Magazine / Source Národohospodářský obzor – Review of Economic Perspectives
MU Faculty or unit

Faculty of Economics and Administration

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Field Economy
Keywords regulation; second-best optimal access charge; monopoly; Cournot oligopoly
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Description This paper claims that Onemli’s results published in “Access Pricing under Imperfect Competition”, Review of Economic Perspectives, 2012, are incorrect. Contrary to Onemli, we claim that in an industry, where a monopoly incumbent produces a key input used by itself and its competitors on a downstream market which is Cournot oligopoly, the regulator should set the second-best access charge such that the incumbent’s total profit is zero if the first-best access charge is not feasible. The competitors’ ability to produce the key input themselves does not change the outcome since no competitor chooses to use this option under this regulation. We also discuss some limitations of the Onemli’s model.
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