Access Pricing Under Imperfect Competition Reconsidered

Staněk Rostislav () and Kvasnička Michal ()
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Staněk Rostislav: Masaryk University, Economic Faculty, Lipová 41a, Brno, 602 00, the Czech Republic
Kvasnička Michal: Masaryk University, Economic Faculty, Lipová 41a, Brno, 602 00, the Czech Republic

Review of Economic Perspectives, 2012, vol. 12, issue 4, 223-234

Abstract: 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: regulation; second-best optimal access charge; monopoly; Cournot oligopoly (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:reoecp:v:12:y:2012:i:4:p:223-234:n:3

DOI: 10.2478/v10135-012-0012-8

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