The Access Pricing Problem with Deregulation: A Note

Mark Armstrong and John Vickers

Journal of Industrial Economics, 1998, vol. 46, issue 1, 115-121

Abstract: This note extends the analysis of Armstrong, Doyle and Vickers [1996] to the case of retail price deregulation. It is shown (i) that the optimal access price may be above, below, or (in the linear case) equal to marginal cost, (ii) that optimal regulation of the margin between the retail price and the access price entails the ECPR, and (iii) that welfare and entrant profit are higher when the level of the access price, rather than the margin, is regulated.

Date: 1998
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