Entry and Component Pricing in Regulated Markets

Ian Dobbs () and Paul Richards

International Journal of the Economics of Business, 1994, vol. 1, issue 3, 355-376

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

Keywords: Component pricing; Network access pricing; Entry; Regulation; Oligopoly, JEL classifications:D43,L40,L51,L90,L98, (search for similar items in EconPapers)
Date: 1994
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DOI: 10.1080/758536227

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