Price Squeezes in a Regulatory Environment

Frank Verboven and Jan Bouckaert

No 3824, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Regulators have recently shown an increased sensitivity to the issue of price squeezes, especially telecom regulators in European countries. This Paper analyses the relevance and the scope of price squeeze tests as proposed by practitioners and economists, taking the existing regulatory environment as fixed. Based on the degree of existing regulation (full, partial or no) we distinguish between three types of price squeezes: regulatory squeezes, predatory squeezes, and squeezes as foreclosure. We argue that the scope of price squeeze tests is limited to predatory price squeeze tests, to be used in combination with other pieces of evidence as collected in standard predation cases. We propose a predatory squeeze test that respects previously made regulatory choices, in contrast with earlier proposed tests by European practitioners and economists. We extend the framework to ask at which aggregation level predatory price squeeze tests ought to be applied, a much-debated issue in telecommunications.

Keywords: Price aqueeze; Foreclosure; Predation; Regulation; Antitrust policy (search for similar items in EconPapers)
JEL-codes: L40 L51 L96 (search for similar items in EconPapers)
Date: 2003-02
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Citations: View citations in EconPapers (3)

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Journal Article: Price Squeezes in a Regulatory Environment (2004)
Working Paper: Price squeezes in a regulatory environment (2003)
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