Competitive Neutrality Via Differential Access Pricing: Preservation of Desired Cross Subsidies Under Competitive Entry
William Baumol ()
Working Papers from C.V. Starr Center for Applied Economics, New York University
This article proposes a regulatory system of non-uniform and competitively beutral pricing of access to the services of a bottleneck facility such as the local loop owned by a local telephone company. To be deemed a bottleneck the facility must be owned as a monopoly, and its services must be indispensable inputs of the final products of competing suppliers. It is shown that the proposed pricing rule is competitively neutral, meaning that it does not favor incumbents in teh final-product market over entrants or the inverse.
Keywords: ACCESS TO MARKETS; PRICING; DISCRIMINATION; SUBSIDIES; COMPETITION (search for similar items in EconPapers)
JEL-codes: L51 (search for similar items in EconPapers)
Pages: 16 pages
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Persistent link: https://EconPapers.repec.org/RePEc:cvs:starer:97-40
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