Abstract

http://ssrn.com/abstract=1433170
 
 

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Price Squeezes and Vertical Discrimination on Next Generation Access Networks


Henry Ergas


University of Wollongong - SMART Infrastructure Facility; Deloitte Access Economics

Emma Lanigan


Concept Economics

Eric Kodjo Ralph


EKonomics LLC

February 4, 2010


Abstract:     
Next generation access networks (NGANs) are in many cases likely to be supplied by vertically integrated firms, that is, firms that both wholesale access and sell services downstream to end-users. A long standing concern of regulators is that such firms may engage in anti-competitive price squeezes. This paper examines this concern and reviews the difficulties associated with conventional imputation tests in an NGAN context. The paper is organised as follows. Section 2 of the paper provides an analytical framework for understanding vertical integration, vertical discrimination, including price squeezes, and the incentives to engage in such behaviour. Section 3 explains why the incentives for a NGAN provider to vertically discriminate are sharply reduced as compared with a traditional vertically integrated telecommunications carrier. Section 4 considers regulatory approaches to the price squeeze. Section 5 focuses on how regulators are also concerned with inefficiently high prices and derives implications for the efficient setting of NGAN access charges.

Number of Pages in PDF File: 26

Keywords: Next generation access networks, Price squeezes, Vertical integration, Vertical discrimination, Significant market power, Imputation tests, Broadband, Telecommunications

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Date posted: July 13, 2009 ; Last revised: March 11, 2010

Suggested Citation

Ergas, Henry and Lanigan, Emma and Ralph, Eric Kodjo, Price Squeezes and Vertical Discrimination on Next Generation Access Networks (February 4, 2010). Available at SSRN: http://ssrn.com/abstract=1433170 or http://dx.doi.org/10.2139/ssrn.1433170

Contact Information

Henry Ergas (Contact Author)
University of Wollongong - SMART Infrastructure Facility ( email )
Northfields Avenue
Wollongong, New South Wales 2500
Australia
Deloitte Access Economics ( email )
9 Sydney Avenue
Barton
Canberra, Kingston 2600
Australia
Emma Lanigan
Concept Economics ( email )
27 Jardine Street
PO Box 5430
Kingston, ACT 2604
Australia
Eric Kodjo Ralph
EKonomics LLC ( email )
706 S Milton Ave
Baltimore, MD 21224-3754
United States
+1-504-708-2342 (Phone)
+1-815-301-5449 (Fax)
HOME PAGE: http://www.ekonomicsllc.com
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