Access Pricing Under Imperfect Competition Reconsidered

• Authors: Rostislav Staněk , Michal Kvasnička
• Languages of publication: EN

Abstracts

EN

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.

Keywords

EN

regulation; second-best optimal access charge; monopoly; Cournot oligopoly

• Publisher: Sciendo
• Journal: Review of Economic Perspectives
• Year: 2012
• Volume: 12
• Issue: 4
• Pages: 223-234

Dates

published

2012-12-01

online

2013-01-29

Contributors

author

Rostislav Staněk

• Masaryk University, Economic Faculty, Lipová 41a, Brno, 602 00, the Czech Republic

author

Michal Kvasnička

• Masaryk University, Economic Faculty, Lipová 41a, Brno, 602 00, the Czech Republic

References

• AMIR, R.-LAMBSONV. E. (2000). On the Effects of Entry in Cournot Markets. Review of Economic Studies, 67(2), Pp. 235-254.[Crossref]
• DIXIT, A. (1986). Comparative Statics for Oligopoly. International economic review, 27(1), Pp. 107-112.[Crossref]
• EGGERTSSON, T. (1990). Economic behavior and institutions, Cambridge: Cambridge University Press.
• ONEMLI, M. B. (2012). Access Pricing Under Imperfect Competition”, Review ofEconomic Perspectives. 12(1). Pp. 3-21.
• SPENCER, B. J.-BRANDER, J. A. (1983). Second Best Pricing of Publicly Produced Inputs. Journal of Public Economics. 20(1), Pp. 113-119.[Crossref]
• TIROLE, J. (1988). Theory of Industrial Organization. Cambridge, Massachusetts: The MIT Press.
• VICKERS, J. (1995). Competition and Regulation in Vertically Related Markets. Review of Economic Studies. 62(1). Pp. 1-17.[Crossref]
• VIVES, X. (1999). Oligopoly Pricing. Cambridge, Massachusetts: The MIT Press.

Identifiers

DOI

10.2478/v10135-012-0012-8