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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26255
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| Title: | Access and Interconnection Pricing: How Efficient is the Efficient
Component Pricing Rule? |
| Authors: | Economides, Nicholas
White, Lawrence J. |
| Issue Date: | Jun-1995 |
| Series/Report no.: | EC-95-04 |
| Abstract: | This paper critiques some of the properties of the so-called 'efficient
component pricing rule' (ECPR) for access to a bottleneck (monopoly)
facility. When an entrant/rival and the bottleneck monopolist both
produce a complementary component to the bottleneck service, the ECPR
specifies that the access fee paid by the rival to the monopolist should
be equal to the monopolist's opportunity costs of providing access,
including any forgone revenues from a concomitant reduction in the
monopolist's sales of the complementary component. We focus especially
on the case in which the monopolist's price for the complementary
component is above all relevant marginal costs. In this case the ECPR's
exclusion of rivals may be socially harmful, since it may be preventing
a substantial decrease in the price of the complementary component. |
| URI: | http://hdl.handle.net/2451/26255 |
| Appears in Collections: | Economics Working Papers
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